Reserve Bank of India (RBI) has increased the loan ceiling for urban co-operative banks (UCBs) to small value customers to 0.40% of their Tier I capital from 0.20% earlier and Rs 3 crore per borrower from Rs 1 crore earlier. These banks have also been allowed to take aggregate exposure of a to residential mortgages (housing loans to individuals), to 25% of its total loans up from 5% earlier, the RBI said.
Total exposure of a UCB to residential mortgages (housing loans to individuals), other than those eligible to be classified as priority sector, has also been increased to 25% of its total loans and advances. This ceiling was earlier capped at 10% of total assets to housing, real estate and commercial real estate loans with an additional 5% of total assets for housing loans to priority sector which includes small value home loans.
Aggregate exposure of a UCB to real estate sector, excluding housing loans to individuals, shall not exceed 5% of its total loans and advances, RBI said.
Ceilings for individual housing loans have been set at Rs 60 lakh per individual borrower for small UCBs, progressively increasing to Rs 1.40 crore per individual borrower, Rs 2 crore and Rs 3 crore for the largest UCBs, the RBI said.
UCBs have also been given two more years to provide for the valuation differential on the security receipts (SRs) held against the assets transferred by them to ARCs, from a five-year glide path (till FY2025-26) was provided in June 2022, which will now be extended to 2027-28.
