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UCBs: Risk Weight on CRE Exposures Hiked to 150%

No longer current — withdrawn, no replacement on file yet

Source: Reserve Bank of India · RBI/2005-06/396 · issued 01 Jun 2006 · ~1 min read

Quick answerRBI raised risk weight on UCBs' commercial real estate exposures from 125% to 150%, effective June 2006, citing rapid credit growth in this sensitive sector. This increases capital requirement for CRE loans.

What changed

The risk weight on banks' exposures to commercial real estate was increased from 125% to 150%. This followed an earlier hike from 100% to 125% in August 2005.

What it means for you

UCBs must now hold more capital against every rupee lent to commercial real estate, reducing their leverage and profitability on such loans. It signals RBI's concern over overheating in the CRE sector and aims to curb excessive credit flow.

Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.

What banks were required to do at the time

Recalculate capital adequacy ratios factoring in the new 150% risk weight on CRE exposures.
Review and possibly tighten CRE lending policies to manage risk-weighted asset growth.
Ensure compliance reporting to the Regional Office acknowledges receipt of this circular.
Monitor CRE portfolio concentration and consider diversifying to avoid capital strain.

Who it affects

All Primary (Urban) Co‑operative Banks

❓ Common questions

Regulatory timeline

Decoded by BankPulse 2026-06-19 18:32 IST
repealed_by — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
Status change: withdrawn 05 Aug 2026, 04:00 IST

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

What is the new risk weight for CRE exposures?

The risk weight has been increased from 125% to 150% for all commercial real estate exposures of UCBs.

When does this change take effect?

The circular was issued on June 1, 2006, and the increased risk weight applies on an ongoing basis from that date.

Why did RBI raise the risk weight?

RBI cited continued rapid expansion in credit to the commercial real estate sector, which it considers sensitive, as the reason for the hike.

📜 This document’s life story (1 recorded event, each backed by RBI’s own words)

Repealed by RBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)

RBI’s words: “Official withdrawal register entry #2651: UBD.PCB.Cir.No.55/09.11.600/05-06 — "Annual Policy Statement for the Year 2006-07 - Risk Weight on Exposures to Commercial Real Estate" dated June 1, 2006”

📜 Read the original circular — full text as issued by RBI

RBI/2005-06/396 
 UBD.PCB.Cir.No.55/09.11.600/05-06 
 June 1, 2006. 
 The Chief Executive Officers of all
 Primary (Urban) co-operative Banks 

 Dear Sir/Madam, 

 Annual Policy Statement for the Year 2006-07- Risk Weight on Exposures to Commercial Real Estate 

 Please refer to our Circular No. UBD.PCB.Cir.No. 8/09.116.00/05-06 dated August 9, 2005 wherein, the risk weight on banks’ exposure to the commercial real estate was increased from 100 per cent to 125 per cent and was applicable on an on-going basis. In this connection, a reference may be made to paragraph 186 of the Annual Policy Statement for the Year 2006-07 ( extract enclosed ). As mentioned therein, it has been decided to increase the risk weight on banks’ exposure to the commercial real estate to 150 per cent. 

 2. Please acknowledge receipt to the Regional Office concerned. 
 Yours faithfully, 

 sd/- 

 (A.K Khound)
 Chief General Manager 

 Extract of Annual Policy Statement for the year 2006-07 
 Risk Weight on Exposures to Commercial Real Estate 
 186. In July 2005, the Reserve Bank had increased the risk weight on exposures to commercial real estate from 100 per cent to 125 per cent. Given the continued rapid expansion in credit to this sensitive sector, it is proposed: 
 • to increase the risk weight to 150 per cent.

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2005-06/396 · issued 01 Jun 2006. The plain-English explanation above is BankPulse’s own independent summary.

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BankPulse Compliance Evidence Pack — generated 05 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=2883&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.