What changed
RBI issued a consolidated Master Circular on housing finance for UCBs, updating and merging all previous instructions issued up to June 23, 2022. The new circular replaces the earlier Master Circular dated July 1, 2015.
What it means for you
UCBs now have a single reference document for housing finance norms, simplifying compliance. The circular reaffirms flexibility for banks to set margins and loan amounts based on board-approved policies, while continuing to support priority sector lending for weaker sections.
What you must do
- Review and update internal housing finance policies to align with the consolidated Master Circular.
- Ensure board-approved margin and loan amount frameworks are documented and compliant.
- Train credit staff on eligible borrower categories and housing schemes as per the circular.
- Monitor housing loan portfolio for priority sector classification and reporting accuracy.
Who it affects
Primary (Urban) Co-operative Banks, Housing finance departments of UCBs
Does this Master Circular introduce new housing loan limits?
No, it consolidates existing instructions without changing loan limits or margins. Banks retain flexibility to decide these based on board-approved policies.
Which borrowers are eligible for housing finance under this circular?
Eligible borrowers include individuals, cooperative/group housing societies, housing boards for EWS/LIG/MIG projects, and owners for home extensions or major repairs.
Are housing loans from UCBs still part of priority sector?
Yes, housing loans to specified categories up to prescribed limits continue to qualify as priority sector lending, as per the circular.