What changed
RBI introduces revised exposure limits and norms for urban co-operative banks to mitigate concentration risk, including limits on individual borrower and group exposures, unsecured advances, and inter-bank exposures.
What it means for you
These directions aim to ensure that urban co-operative banks maintain a granular portfolio and restrict advances to very large borrowers, thereby reducing concentration risk and promoting stable banking practices.
What you must do
- Review and update exposure limits and norms for credit and investment exposures
- Implement measures to maintain a granular portfolio and restrict advances to very large borrowers
- Monitor and report on concentration risk exposure
Who it affects
Urban Co-operative Banks (UCBs), Primary Co-operative Banks
What is concentration risk?
Concentration risk refers to the risk of significant losses due to excessive exposure to a single counterparty or a group of connected counterparties.
What are the key changes in the RBI directions?
The directions introduce revised exposure limits and norms for urban co-operative banks to mitigate concentration risk, including limits on individual borrower and group exposures, unsecured advances, and inter-bank exposures.
What are the key definitions in the RBI directions?
The directions define key terms such as credit exposure, investment exposure, and group, which are used to determine exposure limits and norms.