Home › Circulars › RBI/2010-11/275

UCBs with 12%+ CRAR Exempted from Share-Linking Norm

Current · Source: Reserve Bank of India · RBI/2010-11/275 · issued 15 Nov 2010 · ~1 min read
Quick answerRBI exempts well-capitalised Urban Co-operative Banks (CRAR ≥12% on a continuous basis) from the mandatory requirement that borrowers subscribe to shares worth 2.5–5% of their loan amount. Effective immediately.
The rule, in the simplest words
How it plays out — a real example

Mr. Kumar is processing a loan application from a local jeweller. He checks the bank's CRAR and finds it to be above 12%. He proceeds with the loan without requiring the jeweller to buy shares, making the loan more attractive and hassle-free. A co-operative bank branch officer in Indore, Mr. Kumar, is happy to learn that his bank's CRAR is above 12%. He can now offer loans without forcing borrowers to buy shares, making the loan process more attractive and reducing compliance burden.

What changed

Previously, all UCBs had to enforce share-linking—borrowers had to buy shares equal to 2.5–5% of their loan. Now, UCBs maintaining a CRAR of 12% or above on a continuous basis are exempt from this norm. The exemption is effective from November 15, 2010.

What it means for you

Well-capitalised UCBs can now lend without forcing borrowers to buy shares, reducing compliance burden and making loans more attractive. This gives stronger UCBs flexibility to grow their loan book without adding to capital through share subscriptions. Other UCBs must continue the existing share-linking requirement.

What you must do

Who it affects

Urban Co-operative Banks with CRAR ≥12%, Borrowers of exempted UCBs, Loan officers and compliance teams at UCBs

❓ Common questions

Regulatory timeline

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

What is the share-linking norm that has been exempted?

It was mandatory for borrowers of UCBs to subscribe to shares of the bank equal to 2.5% to 5% of their borrowings. This circular exempts well-capitalised UCBs from that requirement.

What CRAR threshold qualifies a UCB for this exemption?

A UCB must maintain a capital to risk-weighted assets ratio (CRAR) of 12% or above on a continuous basis to be eligible for the exemption.

When does this exemption take effect?

The exemption is effective from the date of the circular, i.e., November 15, 2010.

📜 Read the original circular — full text as issued by RBI
RBI/2010-11/275 UBD.BPD.(PCB). Cir. No. 22 /09.18.201/2010-11 November 15, 2010 The Chief Executive Officers of All Urban Co-operative Banks Dear Sir/Madam, Share Linking to Borrowing Norm in Urban Co-operative Banks The Reserve Bank in its Second Quarter Review of Monetary Policy 2010-11 had proposed exempting well capitalised Urban Co-operative Banks (UCBs) from the share linking to borrowing norm. The relevant paragraph of the Review is reproduced below. “ Exemption from Share Linking to Borrowing Norm 96. It is mandatory for borrowers of UCBs to subscribe to the shares of the bank to the extent of 2.5 - 5.0 per cent of their borrowings. In order to provide flexibility to UCBs, which are already well capitalised to extend loans without adding to capital, it is proposed : • to exempt UCBs which maintain a minimum CRAR of 12 per cent on a continuous basis from the mandatory share linking norms. “ 2. Accordingly, it has been decided to exempt UCBs, which maintain capital to risk-weighted assets ratio (CRAR) of 12 per cent or above on a continuous basis, from the extant mandatory share linking norms. This exemption would be effective from the date of this circular. Yours faithfully, (A. Udgata) Chief General Manager-in-Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2010-11/275 · issued 15 Nov 2010. The plain-English explanation above is BankPulse’s own independent summary.
🧰 Tools — save, print, templates & related
Most relevant forCompliance TeamBranch Manager — PSU / Co-op / RRB (sanctioning powers)Loan Operations / CPC / DisbursementInternal AuditSenior Management / BoardBusiness Head / Vertical Head
🛠 Banker’s toolkit — checklists & reply templates →
Related circulars · Department of Regulation
SFB Pillar 3 Disclosure Norms Aligned with BaselUCB Deposit Rate Disclosure & Uniformity Rules UpdatedLAB Deposit Rate Disclosure & Uniformity Rules TightenedPayments Banks: Interest Rates Must Match Disclosed ScheduleRBI Updates Bulk Deposit Rate Rules and Disclosure Timing
Browse all departments →
Who does what — compliance checklist
💰 Credit
  • Update loan sanction procedures to remove share-linking condition for eligible borrowers.
📜 Compliance
  • Verify your UCB's CRAR is 12% or above on a continuous basis to claim exemption.
  • Maintain documentation proving continuous CRAR compliance for audit and inspection purposes.
  • Communicate the exemption to loan officers and borrowers to avoid confusion.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template

Example: if you are a Compliance officer at a bank this circular applies to (Urban Co-operative Banks with CRAR ≥12%, Borrowers of exempted UCBs, Loan officers and compliance teams at UCBs), your first concrete step on “UCBs with 12%+ CRAR Exempted from Share-Linking Norm” is: “Verify your UCB's CRAR is 12% or above on a continuous basis to claim exemption.” (RBI issued this 15 Nov 2010).

  1. Circular: RBI/2010-11/275 -- UCBs with 12%+ CRAR Exempted from Share-Linking Norm
  2. Issued: 15 Nov 2010
  3. Action required: Verify your UCB's CRAR is 12% or above on a continuous basis to claim exemption.
  4. Action required: Update loan sanction procedures to remove share-linking condition for eligible borrowers.
  5. Action required: Maintain documentation proving continuous CRAR compliance for audit and inspection purposes.
  6. Action required: Communicate the exemption to loan officers and borrowers to avoid confusion.
  7. Owner: ____________ Target date: ____________
  8. Board/committee approval needed? Y / N
  9. 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.

💬 Banker Discussion

Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.

Loading comments…
BankPulse Compliance Evidence Pack — generated 03 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=6101&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.
Public beta — plain-English informational summaries. Always verify against the official RBI source (circular number cited on every page) before making compliance, credit, treasury, audit, or operational decisions. · Join our WhatsApp channel ↗
—