August 9, 2005.
The Chief Executive Officers of all Primary (Urban) co-operative
Prudential norms on capital adequacy – Risk weight
on housing finance/commercial real estate exposures-UCBs
Please refer to our circular UBD.PCB.Cir.33/09.116.00/04-05
dated 05.01.2005 in terms of which the risk weights for banks’ exposure
on housing loans which are fully secured by mortgage of residential housing
properties, extended to individuals by banks was increased from 50 per cent
to 75 per cent for capital adequacy purposes. The risk weights for all other
cases were kept unchanged at 100 percent.
2. It has now been decided to increase the
risk weight on banks’ exposure to the builders and contractors for commercial
real estate from 100 % to 125 % with immediate effect and on an ongoing basis.
However, the risk weight for loans and advances to co-operative/group housing
societies and Housing Board remains unchanged at 100%. Commercial real estate
exposure for the purpose will include fund based and non-fund based exposures
secured by mortgages on commercial real estates (office buildings, retail space,
multi-purpose commercial premises, multi-family residential buildings, multi-tenanted
commercial premises, industrial or warehouse space, hotels etc)
3. Please acknowledge receipt to the concerned Regional Office
Chief General Manager –in-charge.