Current · Source: Reserve Bank of India · RBI/2012-2013/525 · issued 10 Jun 2013 · ~1 min read
Quick answerRBI permits strong Scheduled Urban Co-operative Banks to do repo in corporate debt securities. Eligibility: CRAR ≥10%, gross NPA <5%, three years continuous profit, sound risk management, and concurrent audit of investment portfolio.
The rule, in the simplest words
Only strong urban co-op banks (with CRAR (safety cushion) ≥10%, bad loans <5%, and profit for 3 years in a row) can do repo (borrow or lend using bonds as promise).
Repo in corporate bonds is only allowed with scheduled commercial banks or primary dealers (special bond traders), not with anyone else.
If your bank lends money in repo, you must set aside extra capital for the risk that the other bank might not pay back.
All bonds you get in repo plus your other non-SLR bonds (bonds not counted as government-approved) must stay under 10% of last year's deposits.
Money your bank borrows in repo counts as deposits (DTL) and must follow CRR/SLR (cash and government bond reserve rules), and is capped at 2% of last year's deposits.
How it plays out — a real example
Priya, a treasury officer in Indore, checks her bank's latest numbers: CRAR is 12%, gross NPA is 3%, and profits have been steady for five years. She confirms the investment portfolio has a concurrent audit in place. Then she arranges a repo deal with a scheduled commercial bank in Mumbai, lending ₹50 lakh against corporate bonds, making sure the total non-SLR bonds stay under the 10% deposit limit.
What changed
RBI extended repo in corporate bonds to eligible Scheduled Urban Co-operative Banks. Only banks meeting specific financial health and risk management criteria can participate. Transactions are restricted to scheduled commercial banks and primary dealers.
What it means for you
Stronger urban co-operative banks get a new liquidity management tool using corporate bonds. Lenders in repo must hold capital for counterparty credit risk. Non-SLR investments including repo securities cannot exceed 10% of previous year's deposits; borrowed repo funds are capped at 2% of deposits and count as DTL for CRR/SLR.
What you must do
Verify your bank meets CRAR ≥10%, gross NPA <5%, and three-year profit record before undertaking repo.
Ensure concurrent audit of investment portfolio is in place and risk management practices are sound.
Limit repo counterparties to scheduled commercial banks and primary dealers only.
Monitor non-SLR investment ceiling (10% of previous year's deposits) including securities acquired under repo.
Treat borrowed repo amount as part of DTL and maintain CRR/SLR on it.
Who it affects
Scheduled Urban Co-operative Banks, Scheduled commercial banks and primary dealers (as counterparties), RBI's Internal Debt Management Department
❓ Common questions
What are the eligibility conditions for a UCB to do repo in corporate bonds?
CRAR of 10% or more, gross NPA less than 5%, continuous profit for the previous three years, sound risk management, and mandatory concurrent audit of the investment portfolio.
Can UCBs do repo with any market participant?
No, repo transactions in corporate bonds can only be undertaken with scheduled commercial banks and primary dealers.
How are repo borrowings treated for reserve requirements?
The amount borrowed through repo is part of DTL and attracts CRR and SLR requirements.
📜 Read the original circular — full text as issued by RBI
RBI/2012-2013/525
UBD.BPD. (SCB). Cir.No. 4 /16.20.000/2012-13
June 10, 2013
The Chief Executive Officers of
All Scheduled Primary (Urban) Co-operative Banks
Madam/Dear Sir,
Ready Forward Contracts in Corporate Debt Securities
Please refer to paragraph 77 of the Second Quarter Review of Monetary Policy 2012-13 ( extract enclosed ) and circular No.IDMD.PCD.1423/14.03.02/2012-13 dated October 30, 2012 (copy enclosed) in terms of which it has been decided to permit Scheduled Urban Co-operative Banks with strong financials and sound risk management practices as eligible participants to undertake ready forward contracts in corporate debt securities. Accordingly, Scheduled Urban Co-operative Banks, fulfilling the following conditions only would be permitted to undertake such transactions.
CRAR of 10% or more and gross NPA of less than 5% and continuous record of profits during the previous three years.
Sound risk management practices and mandatory concurrent audit of the Investment portfolio.
2. Further, the Repo transactions in corporate bonds shall be undertaken only with scheduled commercial banks/PDs and not with other market participants. Urban Co-operative Banks which are lenders of funds in a repo transaction may provide for Counter-party credit risk corresponding to the risk weight for such exposure as applicable to the loan /investment exposure. Urban Co-operative Banks may ensure that securities acquired under repo along with other Non-SLR investment already in the Balance Sheet should be within the stipulated ceiling of Non-SLR investment (i.e. 10% of a bank’s total deposits as on March 31 of the previous year). The funds borrowed under repo should be within the limit prescribed for call money borrowing (i.e. 2% of the previous year’s deposits).
3. The amount borrowed by the bank through repo shall be reckoned as part of its DTL and the same shall attract CRR /SLR.
4. Urban Co-operative Banks are advised to adhere to the directions as prescribed by Internal Debt Management Department of Reserve Bank of India for repo in corporate bonds from time to time.
Yours faithfully,
(A.K.Bera)
Principal Chief General Manager
Encl: As above.
Extract of paragraph 77 of Second Quarter Review of Monetary Policy 2012-13
Urban Cooperative Banks (UCBs) - Repo in Corporate Bonds
77. In the SQR of October 2009, the Reserve Bank had announced the introduction of repo in corporate bonds and issued the ‘Repo in Corporate Debt Securities (Reserve Bank) Directions, 2010’ in January 2010. On the basis of requests received from Federations/Associations of UCBs, it has been decided:
to include scheduled UCBs with strong financials and sound risk management practices as eligible participants to undertake repo transactions in corporate bonds.
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2012-2013/525 · issued 10 Jun 2013. The plain-English explanation above is BankPulse’s own independent summary.
Limit repo counterparties to scheduled commercial banks and primary dealers only.
💰 Credit
Verify your bank meets CRAR ≥10%, gross NPA <5%, and three-year profit record before undertaking repo.
📜 Compliance
Ensure concurrent audit of investment portfolio is in place and risk management practices are sound.
Monitor non-SLR investment ceiling (10% of previous year's deposits) including securities acquired under repo.
Treat borrowed repo amount as part of DTL and maintain CRR/SLR on it.
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 Credit Manager at a bank this circular applies to (Scheduled Urban Co-operative Banks, Scheduled commercial banks and primary dealers (as counterparties), RBI's Internal Debt Management Department), your first concrete step on “Repo in Corporate Bonds for Urban Co-op Banks” is: “Verify your bank meets CRAR ≥10%, gross NPA <5%, and three-year profit record before undertaking repo.” (RBI issued this 10 Jun 2013).
Circular: RBI/2012-2013/525 -- Repo in Corporate Bonds for Urban Co-op Banks
Issued: 10 Jun 2013
Action required: Verify your bank meets CRAR ≥10%, gross NPA <5%, and three-year profit record before undertaking repo.
Action required: Ensure concurrent audit of investment portfolio is in place and risk management practices are sound.
Action required: Limit repo counterparties to scheduled commercial banks and primary dealers only.
Action required: Monitor non-SLR investment ceiling (10% of previous year's deposits) including securities acquired under repo.
Action required: Treat borrowed repo amount as part of DTL and maintain CRR/SLR on it.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
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.
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=8025&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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