MUMBAI: In order to facilitate enhanced lending, Reserve Bank today allowed Urban Co-operative Banks (UCBs) to provide housing loans up to Rs 25 lakh under the priority sector lending schemes.
“UCBs would, henceforth, be permitted to utilise the additional limit of 5 per cent of total assets for grant of housing loans to individuals upto Rs 25 lakh, which is covered under the priority sector,” RBI said in a notification.
At present, it said, UCBs are permitted to assume aggregate exposure on real estate, commercial real estate and housing loans up to a maximum of 10 per cent of their total assets with an additional limit of 5 per cent of their total assets for housing loans up to Rs 15 lakh.
On its second quarter monetary policy review in November 2010, the RBI permitted all UCBs to lend up to 10 per cent of their total assets to housing, real estate and commercial real estate and an additional 5 per cent for purchase and construction of dwelling units, costing up to Rs 10 lakh.
“Due to the high cost of dwelling units, UCBs found it difficult to use the additional limit of 5 per cent of total assets,” the central bank said.
In May 2011, the RBI hence allowed UCBs to utilise the additional 5 per cent of their total assets permitted earlier, for housing loans up to Rs 15 lakh.