Master Circular - Exposure Norms and Statutory / Other Restrictions - UCBs
UR
- Applies toUrban co-operative banks · read from RBI’s opening lines
- StatusWithdrawn
- Replaced byReserve Bank of India (Urban Co-operative Banks – Concentration Risk Management) Directions, 2025 · withdrawn and repealed 28 November 2025 by RBI’s RBI/2025-26/100, see the notice
- IssuedApr 01, 2025
- Amendmentsnone tracked
- Length30 points in 4 sections · 3 min read
The four dates on this rule
- PublishedApr 01, 2025The day RBI put this document out. This is the same day as the Issued date on this rule.
- Starts to applyNot statedNot stated separately in this document. Read the rule itself before you assume a start date.
- Time to get readyNot statedCannot be worked out until the day it starts to apply is known.
- Last date to actNot statedNo date to act by was found in this document. Other dates may sit inside single paragraphs.
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23 of the 30 points name no product and bind every product. All products.
Numbers to remember
| March 31, 2025 | It consolidates instructions issued up to March 31, 2025 and adds nothing new. RBI Opening paragraphs |
| 15 per cent | Exposure to one borrower cannot exceed 15 per cent of Tier-I capital. RBI Para 3.1.1 |
| 25 per cent | Exposure to a connected group cannot exceed 25 per cent of Tier-I capital. RBI Para 3.1.1 |
| 50 per cent | At least 50 per cent of all loans must be small value loans. RBI Para 3.3 |
| 25 lakh rupees | A small value loan stays within 25 lakh rupees or 0.4 per cent of Tier-I capital, whichever is higher. RBI Para 3.3 |
| 3 crore rupees | The small value route is capped at 3 crore rupees for one borrower. RBI Para 3.3 |
| 40 per cent | The small loan share had to reach 40 per cent by March 2025 and 50 by March 2026. RBI Para 3.3 |
| five per cent | Other real estate exposure cannot cross five per cent of total loans and advances. RBI Para 3.4.3 |
| 5 lakh rupees | The unsecured cap per borrower rises with deposits, from 1 lakh to 5 lakh rupees. RBI Para 4.1 |
| 9 per cent | A bank below 9 per cent CRAR gets lower caps, from 0.25 lakh to 2 lakh rupees. RBI Para 4.1 |
| 10 per cent | Total unsecured lending cannot exceed 10 per cent of total assets. RBI Para 4.2.1 |
| 90 per cent | A bank with 90 per cent priority loans may, with RBI approval, go to 35 per cent unsecured. RBI Para 4.2.2 |
What it says
How firm is each point
Stated by RBI — RBI’s own paragraph says this. We have only made it plainer.
Our reading — BankPulse read RBI’s paragraph and shortened it. The paragraph is the authority, not this line.
Needs judgement — RBI leaves this to the bank to settle, so nobody can give you a fixed number here.
Must know
1. Nothing new inside
It consolidates instructions issued up to March 31, 2025 and adds nothing new.
2. Fifteen per cent to one
Exposure to one borrower cannot exceed 15 per cent of Tier-I capital.
BankPulse example. Suppose Tier-I capital is ₹200 crore. Exposure to one borrower may not exceed 15 per cent of that, which is ₹30 crore. A group of connected borrowers may go to 25 per cent, or ₹50 crore.
3. Twenty-five to a group
Exposure to a connected group cannot exceed 25 per cent of Tier-I capital.
BankPulse example. Suppose Tier-I capital is ₹200 crore. Exposure to a group of connected borrowers may not exceed 25 per cent of that. That is ₹50 crore for the group taken together.
4. Half in small loans
At least 50 per cent of all loans must be small value loans.
BankPulse example. Suppose total loans and advances are ₹400 crore. At least 50 per cent of that must be small value loans. That is ₹200 crore.
5. What small value means
A small value loan stays within 25 lakh rupees or 0.4 per cent of Tier-I capital, whichever is higher.
BankPulse example. Suppose Tier-I capital is ₹200 crore. 0.4 per cent of that is ₹80 lakh, which is higher than ₹25 lakh. So a small value loan here runs to ₹80 lakh, and the ceiling of ₹3 crore per borrower still applies.
6. Three crore per borrower
The small value route is capped at 3 crore rupees for one borrower.
7. The glide path
The small loan share had to reach 40 per cent by March 2025 and 50 by March 2026.
BankPulse example. The share of small value loans had to reach 40 per cent first, then 50 per cent. A bank at 45 per cent has cleared the first step and not the second.
8. A quarter for homes
Housing loans to individuals outside priority sector cannot cross 25 per cent of total loans.
BankPulse example. Suppose total loans and advances are ₹1,000 crore. Housing loans to individuals outside the priority sector may not exceed 25 per cent of that. That is ₹250 crore.
9. Five for real estate
Other real estate exposure cannot cross five per cent of total loans and advances.
BankPulse example. Suppose total loans and advances are ₹1,000 crore. Real estate lending other than housing loans to individuals may not exceed five per cent of that. That is ₹50 crore.
10. Unsecured by bank size
The unsecured cap per borrower rises with deposits, from 1 lakh to 5 lakh rupees.
11. Weak banks, half that
A bank below 9 per cent CRAR gets lower caps, from 0.25 lakh to 2 lakh rupees.
12. Ten per cent unsecured
Total unsecured lending cannot exceed 10 per cent of total assets.
13. Inclusion banks, thirty-five
A bank with 90 per cent priority loans may, with RBI approval, go to 35 per cent unsecured.
14. No loan on own shares
A bank cannot lend against the security of its own shares.
15. No quiet write-offs
A debt owed by a director or his firm cannot be remitted without RBI's prior approval.
16. No director loans
Loans to directors, their relatives or their firms are barred outright.
17. Nor stand as surety
A director or relative also cannot stand as guarantor for a bank loan.
18. No stockbroker finance
Credit to stockbrokers against shares, bonds or deposits is prohibited, secured or not.
19. Only leasing finance firms
Finance to finance companies is barred except hire purchase and leasing firms.
20. Farming for members only
Agricultural finance goes to full members directly, never through an agency.
Do it
1. No intermediary lending
Lending to groups must be direct; intermediaries are not permitted.
2. Groups, four times savings
A self help group's loan should not exceed four times its savings.
3. Statutory dues first
A borrower must declare that provident fund and other statutory dues are paid.
Background
1. Who is covered
This master circular binds every primary urban co-operative bank.
2. Credit and investment both
The exposure counts loans and advances together with non-SLR investment.
3. Void if remitted
A remission made against that bar is void and has no effect.
4. Four narrow exceptions
Staff loans and loans against government paper, deposits or insurance in their own name stay allowed.
5. Nominal member ceilings
Loans to nominal members carry small fixed ceilings that rise with the bank's deposits.
6. Not on others' deposits
Advances against another bank's fixed deposit receipts are to be avoided.
7. No bridge loans
Bridge loans and interim finance pending market fund raising are prohibited.
What RBI has fined people for under this rulebook
RBI has imposed 26 monetary penalties on this kind of lender. In each one its own stated reason names the subject of this rulebook. The 12 most recent are listed here. Each one links to the press release it was read from.
This tells you the rulebook RBI named. It does not tell you which of the points on this page was broken, because RBI does not say. Read the order itself before drawing any conclusion about your own bank.
Feb 26, 2026. Vita Merchants’ Co-operative Bank Ltd., Vita, Maharashtra ↗
Feb 05, 2026. The Jeypore Co-operative Urban Bank Limited, Odisha — ₹2 lakh (Rupees Two Lakh only) ↗
Feb 05, 2026. Agartala Co-operative Urban Bank Limited, Tripura — ₹2 lakh (Rupees Two Lakh only) ↗
These come from RBI press releases. The penalty tracker holds them all. It also lists the penalties we could not place on any rulebook, and the reason for each one.