What changed
The maximum loan amount that Regional Rural Banks can extend to non-governmental agencies (approved by NHB for refinance) for on-lending to individual dwelling units or slum clearance projects has been increased from Rs 5 lakh to Rs 10 lakh. This change follows the Union Budget 2012-13 announcement and applies to loans sanctioned from the date of this circular.
What it means for you
RRBs can now offer larger loans to NHB-approved intermediaries for housing and slum rehabilitation, potentially boosting priority sector lending in affordable housing. This may help banks meet their priority sector targets more easily while supporting government housing schemes. Lenders should update their internal lending limits and ensure compliance with the revised ceiling for new sanctions.
What you must do
- Update internal loan sanction limits for NHB-approved non-governmental agencies to Rs 10 lakh per borrower for housing/slum rehabilitation purposes.
- Ensure all loans sanctioned from April 27, 2012, adhere to the new limit and are classified correctly under priority sector lending.
- Communicate the revised limit to relevant branches and credit teams handling priority sector advances.
- Acknowledge receipt of this circular to your respective RBI Regional Office.
Who it affects
Regional Rural Banks (RRBs), NHB-approved non-governmental agencies, Borrowers seeking housing loans through intermediaries, Priority sector lending compliance teams
Does this circular apply to loans sanctioned before April 27, 2012?
No, the revised limit of Rs 10 lakh is applicable only to bank loans sanctioned from the date of this circular (April 27, 2012). Earlier loans remain under the old limit of Rs 5 lakh.
Which types of agencies are eligible under this increased limit?
Only non-governmental agencies that are approved by the National Housing Bank (NHB) for refinance and that on-lend for construction/reconstruction of individual dwelling units or for slum clearance and rehabilitation of slum dwellers.
Do RRBs need to report compliance of this circular?
Yes, the circular requires RRBs to acknowledge receipt to their respective RBI Regional Office. No other specific reporting is mentioned in this notification.