Cooperative banks allowed more business on par with commercial banks

Cooperative banks will be eligible for more services on an equal basis with commercial banks. Besides tightening limits on home loans, some will now be allowed to lend to commercial real estate. In addition, urban cooperative banks will also be allowed to offer home banking services to their customers.

“In view of the increase in house prices, it has been decided to increase the existing limits on individual housing loans by co-operative banks,” the Reserve Bank said in its statement on regulatory and security policies. development.

Limits for Tier I/Tier II Urban Cooperative Banks are revised from Rs 30 lakh/Rs 70 lakh to Rs 60 lakh/Rs 140 lakh, respectively. For rural cooperative banks, the limits will increase from Rs 20 lakh to Rs 50 lakh for banks with assessed net worth below Rs 100 crore and from Rs 30 lakh to Rs 75 lakh for other RCBs. These limits were last revised for UCBs in 2011 and for RCBs in 2009.

Further, in view of the growing need for affordable housing and to realize their potential in providing credit facilities to the housing sector, the RBI must enable state co-operative banks and district co-operative banks to extend financing to the housing sector. real estate – residential housing within existing aggregate housing. funding limit of 5 percent of their total assets.

“Today’s announcements regarding home loan limits and home banking are welcome steps by the Reserve Bank of India for the cooperative banking sector. The increase in home loan limits by more than 100% is a big reforming step, in line with longstanding industry demand,” said Ashish Singhal, Managing Director, SVC Co-operative Bank Ltd. This will lead to increased credit flows to the housing sector and will drive the growth of co-operative banking revenue. In addition, home banking will help us provide more personalized attention and convenience to customers, especially the elderly and people with disabilities. These incremental steps will further enable us to ‘to offer 360 degree services in addition to reaffirming our commitment to contribute to the growth of our nation’

However, analysts have raised concerns about regulatory and supervisory issues arising from these measures that RBI has been trying to address. “Customer demand is not generated but satisfied through these measures. Banks now have more flexibility to meet customer requirements for housing loans,” RBI Deputy Governor Rajeshwar Rao said at the post-policy press briefing. “These are subject to prudential safeguards in terms of ceilings, etc. who will bear the risk. We have a system of close supervision of banking entities and banking units and we are able to assess the vulnerability of banks very closely. I see no risk arising from these measures.”

Separately, to provide convenient banking services to customers at their doorsteps, it was decided to allow UCBs to extend home banking services to their customers on the same basis as regular commercial banks.

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