RBI/2013-14/370
UBD.BPD.PCB.Cir No.37/09.22.010/2013-14

November 14, 2013

The Chief Executive Officer of
All Primary (Urban) Co-operative Banks

Dear Sir / Madam,

Advances guaranteed by Credit Risk Guarantee Fund Trust for Low Income Housing (CRGFTLIH) – Risk Weights and Provisioning

The Ministry of Housing & Urban Poverty Alleviation, Government of India has set up the Credit Risk Guarantee Fund Trust for Low Income Housing (CRGFTLIH) vide their Notification No.O-17034/122/2009-H dated June 21, 2012. On the issue of assignment of appropriate risk weight for loans guaranteed by CRGFTLIH, it has been decided as under:

i) Risk weight

UCBs may assign ‘Zero’ risk-weight to the guaranteed portion of the housing loan extended by them to eligible borrowers. The balance outstanding in excess of the guaranteed portion will attract a risk-weight as appropriate to the counter-party.

ii) Provisioning

In case the advance covered by CRGFTLIH guarantee becomes non-performing, no provisions need to be made towards the guaranteed portion of the housing loan. The amount outstanding in excess of the guaranteed portion should be provided for as per the extant guidelines on provisioning for non-performing advances.

Yours faithfully,

(A.K. Bera)
Principal Chief General Manager