Shaktikanta Das, governor of the Reserve Bank of India (RBI), said that the cap on individual home loans extended by cooperative banks has been increased by over 100%.

Das has proposed three initiatives for the cooperative banking industry, recognising the role of cooperative banks in achieving equitable growth.

According to Das, the limitations for individual home loans given by cooperative banks have been raised upwards by more than 100% to promote greater credit flow to the housing industry.

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In keeping with the dispensation granted to scheduled commercial banks (SCBs) and UCBs, the RBI has recommended allowing rural cooperative banks to offer financing to ‘commercial real estate – residential housing’ (i.e. loans for residential housing projects) within the existing aggregate housing finance ceiling of 5% of their total assets.

The rate-setting panel of the Central Bank opted to raise the benchmark interest rate for the second month in a row in order to contain prices that have been over its target band since the beginning of the year.

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“Inflation has steeply increased much beyond the upper tolerance level,” said Shaktikanta Das in an online briefing. “A large part of the rise in inflation is primarily attributed to a series of supply shocks which can be linked to the war,” he said.

In addition, the central bank boosted its inflation prediction for the fiscal year ending March to 6.7% from 5.7% earlier. The RBI’s inflation target range is 2% to 6%. With inflation expected to remain over the tolerance threshold for three quarters, the RBI announced its determination to “stay accommodative.”

The yield on the benchmark 10-year bond fell by two basis points to 7.49%, while the rupee remained barely changed. Stocks fell slightly.

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