RBI draft loosens lending caps for urban co-operative banks

Economic Times
Economic Times 22h India
RBI issued draft revised lending norms for UCBs that raise the aggregate cap on unsecured advances to 20% of total assets (from 10%) and open public consultation until March 4, 2026.
RBI draft loosens lending caps for urban co-operative banks
Why it matters
If adopted, UCBs get more balance-sheet room to grow unsecured retail/priority-sector credit, with incremental unsecured lending above 20% allowed only for priority-sector eligible loans capped at Rs 50,000 per borrower. Higher per-borrower limits (including up to Rs 2.5 lakh for nominal members buying consumer durables) expand ticket sizes UCBs can originate without breaching internal caps. Deregulating tenor and moratorium requirements for housing loans in Tier-3 and Tier-4 UCBs reduces product-structure constraints and can speed rollout of longer-tenor housing offerings in smaller banks.
TOPICS

Finance & Banking Banking Regulation

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