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UCB Loan Cap on Shares/Debentures Now Tied to Tier I Capital

No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2024-25/54 · issued 25 Jul 2024 · ~1 min read
Quick answerRBI has revised the 20% owned funds ceiling for UCB loans against shares/debentures to be based on Tier I capital as of March 31 of the prior year, effective January 1, 2025.

What changed

Previously, the aggregate of all loans against shares and debentures for Primary (Urban) Co-operative Banks was capped at 20% of owned funds. Now, that ceiling is linked to Tier I capital as defined in the April 1, 2024 Master Circular on capital adequacy, using the figure as of March 31 of the previous financial year.

What it means for you

This change tightens the capital base used for the lending limit, as Tier I capital is a narrower measure than total owned funds. UCBs with lower Tier I capital relative to owned funds will see a reduced capacity for such loans, potentially impacting their securities-backed lending portfolios.

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

Who it affects

Primary (Urban) Co-operative Banks (UCBs), Credit and risk management departments of UCBs, Borrowers seeking loans against shares and debentures from UCBs

❓ Common questions

Regulatory timeline

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

When does the new Tier I capital-based ceiling take effect?

The change is effective from January 1, 2025, as per the circular.

Does this circular change any other provisions related to loans against shares and debentures?

No, only the basis for the 20% ceiling has changed; all other related provisions remain unchanged.

📜 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Repealed by RBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)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 #111: DOR.CRE.REC.29/07.10.002/2024-25 — "Bank Finance against Shares and Debentures" dated July 25, 2024”
📜 Read the original circular — full text as issued by RBI
RBI/2024-25/54 DOR.CRE.REC.29/07.10.002/2024-25 July 25, 2024 All Primary (Urban) Co-operative Banks Madam / Dear Sir, Bank Finance against Shares and Debentures Please refer to the circular UBD.No.DS.PCB.CIR.16/13.05.00/2001-02 dated October 22, 2001 and para 6.6.5 of Master Circular - Exposure Norms and Statutory / Other Restrictions – UCBs dated January 16, 2024 , in terms of which Primary (Urban) Co-operative Banks (UCBs) were advised that the aggregate of their all loans against the security of shares and debentures should be within the overall ceiling of 20 per cent of their owned funds. 2. On a review, it has been decided that the aforementioned overall ceiling of 20 per cent shall be linked to Tier I capital of the bank as on 31st March of the previous financial year, as defined in Master Circular - Prudential Norms on Capital Adequacy - Primary (Urban) Co-operative Banks (UCBs) dated April 1, 2024 , as amended from time to time. 3. The change stipulated at paragraph 2 above shall be effective from January 01, 2025. All other related provisions of the aforesaid circulars remain unchanged. Yours faithfully, (Vaibhav Chaturvedi) Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2024-25/54 · issued 25 Jul 2024. The plain-English explanation above is BankPulse’s own independent summary.
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Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12708&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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