Cooperation Minister Amit Shah on Thursday said the RBI's decision to relax norms for cooperative banks, including allowing lending to the housing sector, will increase the flow of funds to the people through this sector.
The Reserve Bank of India (RBI) on Wednesday announced a host of measures for the cooperative sector to enable them to play a bigger role in providing credit to the real estate sector.
"Now in the competitive banking sector, cooperative banks will also get a level playing field," Shah said in a statement. The rise in credit flow to the housing sector through cooperative banks will lead to an increase in economic activity, increase in capital formation and employment generation, which will have a multiplier effect on the economy, he said.
Referring to the RBI decision to allow Rural Cooperative Banks (RCBs) to lend to commercial real estate and residential housing sector, the minister said: "With this important decision, the scope of our rural cooperative banks will increase further".
"Along with this, the resolution of giving affordable houses to the people will also get momentum," Shah said. Among other key decisions, the RBI has doubled the limit of individual housing loans for urban cooperative banks and more than doubled for rural cooperative banks, he added.
The individual housing loan limit for tier-I urban cooperative banks (UCBs) has been increased from Rs 30 lakh to Rs 60 lakh, for tier-2 UCBs from Rs 70 lakh to Rs 1.40 crore and RCBs limit has been increased from Rs 20 lakh and Rs 30 lakh to Rs 50 lakh and Rs 75 lakh, respectively.
In the third decision, the minister said, the RBI has allowed urban cooperative banks to provide doorstep banking facilities to their customers. "With this decision, cooperative banks will get a level playing field in the competitive banking sector and they will be able to provide door-to-door banking facilities to customers like other banks," he added.
Stating that many old demands and problems of the cooperative sector have been resolved since the formation of the new Ministry of Cooperation, the minister said the RBI decisions will fulfil the long-standing demands of cooperative banks.
Shah also mentioned in a span of less than one year, the government has taken many historic decisions for the cooperative sector, which were needed for a long time. Noting that the cooperative sector has immense potential for the development and empowerment of farmers, agriculture and rural areas of the country, he said the government is empowering the cooperative sector with the mantra of 'Sahakar Se Samriddhi'.
-WIth PTI Input