cooperative banks: RBI announces measures for cooperative banks to enhance credit flow for housing sector

The RBI today made announcements for cooperative banks in order to deepen credit flow to the housing sector,

While announcing the monetary policy, the governor Shaktikanta Das said that the cooperative banks will now be able to lend more for individual home loans.

This will ensure better credit flow in the residential housing sector. The governor said that the move comes in the wake of rising residential housing prices.

“Limits for individual housing loans extended by urban & rural cooperative banks, are being revised upwards by over 100%, considering increase in house prices,” the governor outlined during the monetary policy announcement.

“Accordingly, the limits for Tier I /Tier II UCBs shall stand revised from Rs 30 lakh/ Rs 70 lakh to Rs 60 lakh/ Rs 140 lakh, respectively. As regards RCBs, the limits shall increase from Rs 20 lakh to Rs 50 lakh for RCBs with assessed net worth less than Rs 100 crore; and from Rs 30 lakh to Rs 75 lakh for other RCBs,” the statement added.

The RBI also allowed rural cooperative banks to extend financing to commercial real estate-residential projects to augment the credit flow.

The RBI said that the measure has been announced in view of the growing needs of the affordable housing sector.

“Considering the growing need for affordable housing and to realise their potential in providing credit facilities to the housing sector, it has been decided to allow StCBs and DCCBs to extend finance to Commercial Real Estate – Residential Housing (CRE-RH) within the existing aggregate housing finance limit of 5 per cent of their total assets,” the RBI statement said.

Along with that, the RBI also announced doorstep delivery of services by urban cooperative banks to meet the needs of senior citizens.

The steps announced by the RBI will boost the real estate sector further as it is a key driver of the economic recovery. The move will further boost credit flow in the economy.

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