In the recently concluded Parliament session, parliamentarian Baburam Nishan raised some queries with the government, seeking details of home loan service and other benefits that are being offered by co-operative banks in the country.
Co-operative banks can lend to individual borrowers looking to finance their housing finance needs, but the home loan amount they can disburse may vary bank to bank as the Reserve Bank sets limits for them based on their net worth.
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In the recently concluded Parliament session, one parliamentarian Baburam Nishan raised some queries with the government, seeking details of home loan service and other benefits that are being offered by co-operative banks in the country.
The member asked in the Rajya Sabha whether all types of co-operative banks can give individual home loans and also enquired about the benefits that can be provided by such financial institutions on account of the same.
In response, Minister of State in Finance Ministry Pankaj Chaudhary said different co-operative banks — State Cooperative Banks (STCBs), District Central Cooperative Banks (DCCBs) and Urban Co-operative Banks (UCBs) — are extending residential housing loans to an individual borrower, as per the limits revised by the RBI.
The Reserve Bank has fixed a loan disbursement limit for these banks based on their net worth.
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Categories of co-operative bank and limit of loan they can sanction:
State Cooperative Banks and District Central Cooperative Banks with net worth less than Rs 100 crore can lend up to Rs 50 lakh to a home loan borrower. State Cooperative Banks and District Central Cooperative Banks with net worth of more than Rs 100 crore are allowed to disburse up to Rs 75 lakh.
When it comes to urban co-operative banks (UCBs), Tier-I UCBs with deposits up to Rs 100 crore can finance up to Rs 60 lakh as a housing loan to an individual. Tier-II UCBs with deposits more than Rs 100 crore and up to Rs 1000 crore are allowed to disburse up to Rs 1.4 crore as a home loan.
The government also shared details about the benefits that can be provided by co-operative sector banks and their members.
The minister said that co-operative banks serve as an important channel for purveying housing loans in unserved/underserved regions, as StCBs and DCCBs have a huge branch network of over 16,000 branches spread across 35 states/UTs and over 78.5% of these branches are located in rural/semi-urban areas.
Since housing loans are backed by tangible assets, they offer a secured medium for diversifying cooperative banks’ business with reduced risk.
Cooperative banks are owned and operated by their members and function with the guiding cooperative principle of ‘Concern for Community’. They play an important role in providing affordable credit to their members in a timely manner.
