What changed
RBI has consolidated and updated all previous credit risk management guidelines for Rural Co-operative Banks into a single comprehensive direction. Key additions include detailed definitions for cash credit, current accounts, related party lending, and key managerial personnel. The directions also introduce new requirements for filing security interests in CERSAI and maintenance of cash credit/overdraft accounts.
What it means for you
RCBs must now align their credit risk management frameworks with these consolidated directions, which carry the force of law under the Banking Regulation Act. Banks need to review and update board-approved policies, ensure compliance with statutory restrictions, and implement the new norms for valuation, CERSAI filing, and account maintenance. Non-compliance could attract regulatory action.
What you must do
- Review and update board-approved credit risk management policies to align with the new directions.
- Ensure all statutory and regulatory restrictions on lending activities are complied with immediately.
- Implement the new definitions for cash credit, current accounts, and related party lending in internal systems.
- Set up or strengthen processes for filing security interests (immovable, movable, intangible) in CERSAI as per Chapter VI.
- Train staff on the revised cash credit and overdraft account maintenance requirements under Chapter VIA.
Who it affects
State Co-operative Banks (StCBs), Central Co-operative Banks (CCBs), Board of Directors of RCBs, Credit risk management teams of RCBs, Compliance officers of RCBs
When do these directions come into effect?
The directions came into effect immediately upon issuance on November 28, 2025, and have been updated as on April 1, 2026.
Which banks are covered under these directions?
These directions apply to all Rural Co-operative Banks, which include State Co-operative Banks (StCBs) and Central Co-operative Banks (CCBs) as defined in the NABARD Act, 1981.
What is the key change regarding related party lending?
The directions now define 'lending' to related parties as extending funded or non-fund-based credit facilities, and introduce specific definitions for 'contract or arrangement' and 'control' from the Companies Act, 2013.