In a significant move aimed at strengthening the housing finance capabilities of rural co-operative banks, Maharashtra State Co-operative Bank (MSC Bank) Administrative Board Chairman Vidyadhar Anaskar has written to the Reserve Bank of India (RBI) seeking an enhancement in housing loan limits and tenure norms for Rural Co-operative Banks (RCBs).
In his representation addressed to the Chief General Manager, Department of Regulation, RBI, Anaskar highlighted the disparity between lending limits applicable to Rural Co-operative Banks and Urban Co-operative Banks (UCBs). While RBI’s 2022 circular capped housing loans for RCBs at Rs 75 lakh per borrower, UCBs are currently permitted to extend loans up to Rs 3 crore per dwelling unit, depending on their tier.
He emphasized that rising real estate prices, even in smaller towns, have rendered the existing limits inadequate.
“In cities like Mumbai, Pune, and Nashik, even modest homes often exceed Rs 1 crore, while in smaller towns prices have crossed Rs 75 lakh. This puts Rural Co-operative Banks at a competitive disadvantage,” the letter noted.
Calling for a level playing field, Anaskar urged RBI to enhance the housing loan ceiling for RCBs to Rs 3 crore, aligning them with UCB norms. He argued that such a move would not only boost business opportunities for co-operative banks but also improve access to housing finance for borrowers.
Additionally, the MSC Bank chairman proposed that financially strong RCBs, particularly those with a net worth exceeding Rs 1,000 crore, be granted autonomy to determine loan tenure and moratorium periods for under-construction properties through board-approved policies, similar to UCBs. This, he said, would help reduce EMI burdens and make housing loans more affordable, especially for younger borrowers.
The representation underscores the growing demand within the co-operative banking sector for regulatory parity and flexibility in response to evolving market realities.
