On house loans with adjustable interest rates, UCBs are not permitted to impose foreclosure fees or prepayment penalties. According to the circular, UCB housing loans must be repaid in no more than 20 years.
Digital Desk: The cap on home loans given by urban cooperative
banks was quadrupled by the Reserve Bank of India (RBI) on Thursday (UCB).
Accordingly, tier-I UCBs can provide individual home loans of up to Rs 60 lakh,
while tier-II UCBs can provide loans of up to Rs 1.4 crore, according to a
master circular from the central bank. The announcement was made by the RBI in
its monetary policy report from June. The most recent update to the UCB lending
cap was made in 2011.
The RBI had stated on June 8 that the current limits on individual
housing loans by cooperative banks have been increased "taking into
consideration the increase in housing costs since the restrictions were last amended
and considering the needs of customers."
The prudential lending standards for these institutions have also
been updated by the central bank. The RBI has decreased the exposure
restrictions of UCBs to a set of related borrowers from 40 percent to 25 percent
of its total tier-I capital, according to the circular. The UCB exposure cap
for a single borrower is still set at 15% of tier-I capital. Housing, real
estate, and commercial real estate loan exposure for UCBs is capped at 10% of
their total assets.
On house loans with adjustable interest rates, UCBs are not
permitted to impose foreclosure fees or prepayment penalties. According to the
circular, UCB housing loans must be repaid in no more than 20 years.
On June 8, the central bank approved loans for residential housing
projects from rural cooperative banks. The goal of the action is to increase
the amount of credit that cooperative banks extend to the housing sector.
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