Reserve Bank of India (Rural Co-operative Banks – Asset Liability Management) Directions, 2025
UR
- Applies toRural co-operative banks
- StatusIn force
- IssuedNov 28, 2025
- Amendmentsnone tracked
- Length51 points in 5 sections · 5 min read
The four dates on this rule
- PublishedNov 28, 2025The day RBI put this document out. This is the same day as the Issued date on this rule.
- Starts to applyNov 28, 2025The day this rule starts to apply, as RBI's own text states it.
- Time to get readyNoneIt starts to apply on the day it was published.
- 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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What it says
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Opening paragraphs
1. What this book does
This book sets how a rural co-operative bank must manage its assets against its liabilities.
Chapter I. Preliminary
1. Start date
These rules took effect from the date RBI issued them.
2. Who is covered
These rules apply to every rural co-operative bank.
3. Words from the Acts
Any other word takes its meaning from the Banking Regulation Act or the RBI Act.
Chapter II. Role of the Board
Do it
1. Tell the stakeholders
The board must give the bank's stakeholders enough information.
2. Stay inside the limits
The bank's strategy must keep it inside the limits the board set.
Background
3. The board owns the risk
The board carries overall responsibility for risk. It decides the risk management policy.
4. A committee to watch it
A committee of the board oversees how the system is put in place.
5. Limits on running gaps
The board approves limits on the running total of mismatches across every time bucket.
6. Sign off the trading book
The board or the committee approves the size, mix, holding period and cut-loss of the trading book.
7. Limits on each gap
The board approves limits on each gap in the interest rate sensitivity statement.
Chapter III. Asset Liability Management Governance
Do it
1. A moving frame
The system must give a full and moving frame for measuring and managing these risks.
2. Better business decisions
The work should build risk discipline into the bank's business decisions.
3. Make it a strategic tool
The system should grow into a tool management uses, with the risk policies and tolerances set out plainly.
4. What the process covers
The process must plan and control the flow, mix, cost and yield of the balance sheet.
5. Work inside the policy
Operations must sit inside the risk policies and tolerances the board approved.
6. Disclose the risks
Risk disclosures must go alongside the balance sheet, the income statement and the cash flow statement.
7. Set up an ALCO
A bank must set up a committee of senior management, including the chief executive, that meets regularly.
8. Train the nodal officer
The bank sets how often the committee meets and must build the skills of its nodal officer.
Background
9. Three pillars
The system rests on information, organisation and process.
10. Who sits on it
Its size follows the bank's business mix and how complex the organisation is.
11. The support group
Operating staff form a support group. It studies the risk profile and reports it to the committee.
12. What the ALCO decides
The committee plans the balance sheet for risk and return.
13. What is on its agenda
Its agenda starts with reviewing what was decided at the last meeting.
14. Add what you need
That agenda is an example, not a limit. A bank adds what its own case needs.
Chapter IV. Liquidity Risk Management
Do it
1. Measure it all the time
Management must measure liquidity continuously and test it under different assumptions.
2. Track the running total
A bank must watch its running mismatch across every bucket against board-approved limits.
Background
3. The maturity ladder
The maturity ladder measures net funding needs, through the Structural Liquidity Statement.
4. Fixed time buckets
The maturity profile sets the buckets used to measure future cash flows.
5. Place flows when they fall
Every inflow and outflow sits in the bucket where it is expected.
6. The first two buckets
The short buckets matter most, and the negative gap there is capped.
7. Permanent by residual
Statutory liquidity securities and other permanent investments sit in the bucket matching their remaining maturity.
8. Sign off that book too
The board or the committee approves the size, mix, holding period and cut-loss of the current category.
9. Who may use the window
A scheduled state co-operative bank on core banking, meeting the capital test, may use RBI's liquidity windows.
BankPulse example. A state co-operative bank runs Core Banking Solution and holds a capital ratio of 11 per cent. That is at least 9 per cent, so it may use the window. A bank at 8 per cent may not.
10. A published eligible list
RBI's Department of Regulation tells the markets department which banks are eligible.
11. The list is kept current
That eligibility is reviewed as it goes, to see the capital test is still met.
Chapter V. Interest Rate Risk (IRR) Management
Background
1. Two ways to see it
Interest rate risk hits reported profit at once through the earnings view.
2. Move on when ready
A bank is expected to build the skill to move to modern measurement techniques.
3. Work it out by date
Gaps are worked out over time intervals as at a given date, through the rate sensitivity statement.
4. What the report shows
The gap report separates assets and liabilities into buckets by residual maturity.
5. Group by the earlier date
Items are grouped by residual maturity or by the next repricing date, whichever comes first.
6. Which way the gap cuts
A positive gap may gain from rising rates. A negative gap does not.
7. Limits with board approval
The board or the committee approves a limit on each gap.
Chapter VI. General
1. Study the behaviour
A bank must build a way, backed by studies, to estimate how its assets and liabilities behave.
2. Price funds internally
A bank must follow a clear transfer pricing system for pricing assets and liabilities.
3. Disclose to the market
The board must see that enough financial information reaches stakeholders.
Chapter VII. Monitoring and Reporting
1. Quarterly returns
The two returns may be sent quarterly.
Chapter VIII. Repeal and Other Provisions
1. Old instructions repealed
The old rules on this subject were repealed by RBI's own circular.
2. Earlier action stands
What was done or begun under the old rules is still ruled by them.
BankPulse example. A show cause notice was issued under the old rules last year. The repeal does not move it. Any action taken or initiated under the repealed directions is still governed by them. The new rulebook applies to what comes after.
3. Adds to other law
These rules add to other laws in force. They take nothing away.
BankPulse example. A bank follows these Directions and thinks the matter is closed. It is not. Any other laws, rules, regulations or directions in force still apply on top. Where another one asks for more, the bank does the more.
4. RBI's reading is final
RBI may clear up doubts, and its reading of any clause is final.
The same subject for other kinds of institution
The same subject for other kinds of institution.
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RBI liquidity and asset liability rules for local area banks
RBI liquidity and asset liability rules for regional rural banks
RBI liquidity and asset liability rules for small finance banks
RBI liquidity and asset liability rules for urban co-operative banks
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RBI digital banking channel rules for rural co-operative banks 2025
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