Urban Co-operative Banks (UCBs) have sought an upward revision in the ceiling for housing loans from the current limit of 15 percent of net liabilities and the creation of an independent limit for commercial real estate exposure.
The chief executives of select Urban Banks, who met RBI governor Shanktikanta Das last week, also urged the Central bank to enhance the ceiling on gold loans from Rs two lakh to Rs five lakh under the bullet repayment scheme.
About the revision in norms for home loans, the National Federation of Urban Cooperative Banks and Credit Societies (NAFCUB) said the existing limits on individual housing loans have been doubled for tier-I and tier-II banks. But the sectoral exposure limit of 15 per cent to housing and commercial real estate has remained unchanged.
As a result, most banks have not been able to benefit from the enhanced individual limit as many have already reached the sector exposure ceiling including the 5 per cent additional allocation.
Further, the sector has been requesting for two independent exposure limits--one for housing, the other for commercial real estate. NAFCUB suggested that the limit of 20 per cent be set for housing and a separate limit of 5 per cent for commercial real estate.
There could be flexibility for using the limit prescribed for (5.0 per cent) also for housing (including Prime Minister Awas Yojana). This would enable the banks to benefit from the recent enhancement in limit of individual housing loans, it added.
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As for gold loans, UCBs have a relative advantage as their customers who are predominantly from middle class/lower middle class are more likely to be gold loan clients. Hence, the regulatory prescriptions need to be highly supportive of growth of this portfolio of the UCBs.
NAFCUB said the ceiling on Gold loans should be revised from Rs two lakh to Rs five lakh under the bullet repayment scheme. Also repayment period is bullet repayment should be raised to 24 months from 12 months and in case of Equated Monthly Instalments (EMI) repayment should be raised to 36-48 months in line with NBFCs from 12 months.
