Home › Circulars › RBI/2008-09/368

Revised Inter-Bank Deposit Limits for Urban Co-op Banks

Current · Source: Reserve Bank of India · RBI/2008-09/368 · issued 30 Jan 2009 · ~2 min read
Quick answerRBI revised prudential limits for UCBs placing deposits with other banks: gross inter-bank exposure capped at 20% of total deposit liabilities, single-bank limit at 5%. Certain SLR deposits are exempt. UCBs must set board-approved policies and review half-yearly.
The rule, in the simplest words
How it plays out — a real example

Every six months, Rohan, a treasury officer at a Primary Co-operative Bank in Indore, checks the bank's inter-bank deposits to ensure they don't exceed 20% of their total deposit liabilities. He verifies that deposits with any single bank are within 5% of their total deposit liabilities and identifies exempt deposits, such as non-scheduled Tier I SLR deposits with PSBs/IDBI. Rohan drafts and reviews the bank's board-approved policy for inter-bank deposit placement, ensuring it covers liquidity, cost, returns, and counterparty risk. A treasury officer in Indore reviews the bank's inter-bank deposits to ensure they stay within the 20% limit.

What changed

RBI reviewed earlier guidelines (Sept 2007, May 2003) and set a prudential inter-bank gross exposure limit of 20% of total deposit liabilities as of previous March 31. Within this, deposits with any single bank are capped at 5%. Exemptions apply for non-scheduled Tier I UCBs' SLR deposits with PSBs/IDBI and deposits with Central/State Cooperative Banks. Non-scheduled UCBs placing deposits with scheduled UCBs remain subject to a 5% single-bank limit, and scheduled UCBs' total inter-UCB deposits accepted cannot exceed 10% of their deposit liabilities.

What it means for you

UCBs must tighten monitoring of inter-bank exposures to stay within the new 20% gross and 5% single-bank caps. Exemptions for certain SLR deposits provide relief but require careful tracking. Banks need board-approved policies covering funds position, liquidity, cost, returns, and counterparty risk, with half-yearly reviews. Non-compliance could lead to regulatory action.

What you must do

Who it affects

All Primary (Urban) Co-operative Banks (UCBs), Non-scheduled Tier I UCBs, Scheduled UCBs accepting inter-UCB deposits, Commercial banks and IDBI Bank Ltd (as deposit recipients)

❓ Common questions

What is the new gross inter-bank exposure limit for UCBs?

The total deposits placed by a UCB with other banks (including call money, notice money, CDs, and balances for clearing/CSGL/currency chest/remittance) cannot exceed 20% of its total deposit liabilities as of March 31 of the previous year.

Are there any exemptions from these prudential limits?

Yes. Non-scheduled Tier I UCBs' SLR deposits held with Public Sector Banks and IDBI Bank Ltd (up to 15% of NDTL) are exempt. Also, deposits with the Central Cooperative Bank or State Cooperative Bank of the concerned state, treated as SLR under Section 24 of the Banking Regulation Act, are exempt.

What are the limits for inter-UCB deposits between non-scheduled and scheduled UCBs?

A non-scheduled UCB cannot place deposits with any single scheduled UCB exceeding 5% of its total deposit liabilities. A scheduled UCB cannot accept total inter-UCB deposits exceeding 10% of its total deposit liabilities as of March 31 of the previous year.

📜 Read the original circular — full text as issued by RBI
Notifications - Reserve Bank of India Skip to main content Selected Selected Change Language हिंदी Search the Website Search Home About Us ▼ About Us Organisation & Functions ▶ Organisation Structure Departments Offices Training Establishment ▶ College of Agricultural Banking Reserve Bank Staff College College of Supervisors RBI's Functions and Working Governors Deputy Governors Executive Directors Communication Policy of RBI Sources of Information ▶ Annual Publications Half-yearly Publications Quarterly Publications Monthly Publications Weekly Publications Occasional Publications SDDS NSDP Data Releases Publications available on Subscription General Information RBI History Museum ▶ The RBI Museum RBI Monetary Museum Notification ▼ Notifications Master Directions Master Circulars Amendment Directions Draft Notifications/Guidelines ▶ Draft Notifications/Guidelines Draft Directions (RE-wise) Index To RBI Circulars Standalone Circulars Circulars Withdrawn Press Releases Speeches & Media Interactions ▼ Speeches Media Interactions Memorial Lectures Podcasts Publications ▼ Biennial Annual Half-Yearly Quarterly Bi-monthly Monthly Weekly Occasional Reports Working Papers Legal Framework ▼ Act Rules Regulations Schemes Research ▼ External Research Schemes RBI Occasional Papers Working Papers RBI Bulletin History DRG Studies KLEMS State Statistics and Finances Statistics ▼ Data Releases Database on Indian Economy Public Debt Statistics Regulatory Reporting ▼ List of Returns Data Definition Validation rules/ Taxonomy List of RBI Reporting Portals FAQs of RBI Reporting Portals Home Notifications Notifications ( 40 kb ) Placement of deposits with other banks by primary (urban) cooperative banks (UCBs) RBI/2008-09/368 UBD (PCB) BPD Cir No: 47 /16.20.000/2008-09 January 30, 2009 The Chief Executive Officers of All Primary (Urban) Co-operative Banks Dear Sir/Madam, Placement of deposits with other banks by primary (urban) cooperative banks (UCBs) Please refer to the guidelines contained in our circular UBD BPD PCB Cir 14/16.20.00/2007-08 dated September 18, 2007 and BPD PCB Cir 46/ 16.20.00/2002-03 dated May 17, 2003 on the captioned subject. 2. On the basis of representations received from banks and their Federations, the existing guidelines were reviewed. The revised guidelines on the subject are as under: i) Prudential inter-bank (gross) exposure limit The total amount of deposits placed by an UCB with other banks (inter-bank) for all purposes including call money/ notice money, and deposits, if any, placed for availing clearing facility, CSGL facility, currency chest facility, remittance facility and non-fund based facilities like Bank Guarantee (BG), Letter of Credit (LC), etc shall not exceed 20% of its total deposit liabilities as on March 31 of the previous year. The balances held in deposit accounts with commercial banks and in permitted scheduled UCBs and investments in Certificate of Deposits issued by commercial banks, being inter bank exposures, will be included in this 20% limit. ii) Prudential inter-bank counter party limit Within the prudential inter-bank (gross) exposure limit, deposits with any single bank should not exceed 5 % of the depositing bank's total deposit liabilities as on March 31, of the previous year. iii) Exemptions from the prudential limit As per the extant policy, non-scheduled UCBs in Tier I have been exempted from maintaining SLR in Government and other approved securities up to 15% of their NDTL provided the amount is held in interest bearing deposits with the Public Sector Banks and IDBI bank Ltd. These deposits are exempted from the prudential limit on inter-bank exposure limits [Paragraph 2 (i) & (ii)]. The balances maintained by UCBs with the Central Cooperative Bank of the district concerned or with the State Cooperative Bank of the State concerned are treated as SLR under the provisions of Section 24 of the Banking Regulation Act, 1949(AACS). These deposits are exempted from the prudential limit on inter-bank exposure limits [Paragraph 2 (i) & (ii)]. 3. The placement of deposits by non-scheduled UCBs with scheduled UCBs would continue to be as per the guidelines issued vide our circular BPD PCB Cir 46/16.20.00/2002-03 dated May 17, 2003. However, the amount of deposits placed by a non-scheduled UCB with any scheduled UCB should not exceed 5% of the depositing bank's total deposit liabilities as on March 31 of previous year. The total inter-UCB deposits accepted by a scheduled UCB should not exceed 10% of its total deposit liabilities as on 31st March of the previous financial year as hither to. 4. Keeping in view the above prudential limits, UCBs may formulate a policy taking into account their funds position, liquidity and other needs for placement of deposits with other banks, the cost of funds, expected rate of return and interest margin on such deposits, the counter party risk, etc and place it before their Board of Director. The Board should review the position at least at half yearly interval. 5. The guidelines on investments in non-SLR securities by UCBs are being issued separately. Yours faithfully, (A.K. 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Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2008-09/368 · issued 30 Jan 2009. The plain-English explanation above is BankPulse’s own independent summary.
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Who does what — compliance checklist
🏦 Branch Manager
  • Draft or update a board-approved policy for inter-bank deposit placement covering liquidity, cost, returns, and counterparty risk, and review it at least half-yearly.
⚙️ Operations
  • Calculate your total deposit liabilities as of March 31 previous year and ensure gross inter-bank deposits (including call money, CDs, clearing balances) do not exceed 20%.
📜 Compliance
  • Verify that deposits with any single bank are within 5% of your total deposit liabilities.
  • Identify and segregate exempt deposits (non-scheduled Tier I SLR deposits with PSBs/IDBI, and deposits with Central/State Coop Banks) from the prudential limit calculation.
  • For non-scheduled UCBs: ensure deposits with any scheduled UCB do not exceed 5% of your deposit liabilities; for scheduled UCBs: cap total inter-UCB deposits accepted at 10% of your deposit liabilities.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template

Example: if you are an Operations officer at a bank this circular applies to (All Primary (Urban) Co-operative Banks (UCBs), Non-scheduled Tier I UCBs, Scheduled UCBs accepting inter-UCB deposits, Commercial banks and IDBI Bank Ltd (as deposit recipients)), your first concrete step on “Revised Inter-Bank Deposit Limits for Urban Co-op Banks” is: “Calculate your total deposit liabilities as of March 31 previous year and ensure gross inter-bank deposits (including call money, CDs, clearing balances) do not exceed 20%.” (RBI issued this 30 Jan 2009).

  1. Circular: RBI/2008-09/368 -- Revised Inter-Bank Deposit Limits for Urban Co-op Banks
  2. Issued: 30 Jan 2009
  3. Action required: Calculate your total deposit liabilities as of March 31 previous year and ensure gross inter-bank deposits (including call money, CDs, clearing balances) do not exceed 20%.
  4. Action required: Verify that deposits with any single bank are within 5% of your total deposit liabilities.
  5. Action required: Identify and segregate exempt deposits (non-scheduled Tier I SLR deposits with PSBs/IDBI, and deposits with Central/State Coop Banks) from the prudential limit calculation.
  6. Action required: Draft or update a board-approved policy for inter-bank deposit placement covering liquidity, cost, returns, and counterparty risk, and review it at least half-yearly.
  7. Action required: For non-scheduled UCBs: ensure deposits with any scheduled UCB do not exceed 5% of your deposit liabilities; for scheduled UCBs: cap total inter-UCB deposits accepted at 10% of your deposit liabilities.
  8. Owner: ____________ Target date: ____________
  9. Board/committee approval needed? Y / N
  10. Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.

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Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=4809&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.
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