Reserve Bank of India (Rural Co-operative Banks – Concentration Risk Management) Directions, 2025
UR
- Applies toRural co-operative banks
- StatusIn force
- IssuedNov 28, 2025
- Amendmentsnone tracked
- Length42 points in 5 sections · 4 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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Numbers to remember
| 50 per cent | Only 50 per cent of a guarantee or letter of credit is counted. RBI Para 5(3) |
| 35 per cent | Lendable resources take out the liquid assets the bank must hold, at 35 per cent of its deposits. RBI Para 5(6) |
| ₹100 crore | The home loan ceiling for one person depends on whether the bank's net worth reaches ₹100 crore. RBI's own table beside this point gives both amounts. RBI Para 12 |
| 5 percent | All housing lending together stops at 5 percent of total assets. RBI Para 16 |
| five per cent | Loans to builders of housing projects are allowed inside the same five per cent. RBI Para 18 |
| 10 per cent | In such a project the commercial space may not pass 10 per cent of the built area. RBI Para 18 |
| 0.75 per cent | These loans carry a standard asset provision of 0.75 per cent and a risk weight of 75 per cent. RBI Para 18 |
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.
Chapter I. Preliminary
Must know
1. Starts at once
The rules start the moment RBI issues them.
2. Who must follow this
These rules apply to every rural co-operative bank.
3. Breaking the rules is punished
Not following these rules brings supervisory and enforcement action.
4. What capital fund means
Capital fund is paid up capital plus free reserves.
5. Revaluation gains are out
Reserves made by revaluing buildings and land do not count.
6. Refinanced money counts too
Money lent from refinance taken from a higher agency counts the same.
7. Cash credit takes the higher
For a cash credit the bank counts the higher of the limit and the amount owed.
8. Term loan counts the balance
For a term loan the bank counts only the amount still owed.
9. A guarantee counts at half
Only 50 per cent of a guarantee or letter of credit is counted.
10. Firms count as individuals
A partner, a sole proprietor and a partnership firm all count as individuals.
11. What lendable resources means
Lendable resources take out the liquid assets the bank must hold, at 35 per cent of its deposits.
Background
12. Which banks those are
They are the State co-operative banks and the central co-operative banks.
Chapter II. Exposure Norms
Must know
1. Same for both kinds
The limits are the same for a State bank and a central bank.
2. Credit societies are outside
Lending to a village credit society sits outside these limits.
3. Farm lending is outside
Loans for agriculture and allied purposes sit outside these limits.
4. Weavers are outside
Finance to a handloom or powerloom weaver for weaving sits outside these limits.
5. NABARD may allow more
In a special case NABARD may let the bank lend beyond these limits.
6. Shares in processing societies
The bank may still lend a member to buy shares in a co-operative processing society.
7. The rating sets the ceiling
The ceiling for one person moves with the inspection rating. A bank rated A may lend 60 lakh, a bank rated D only 25 lakh.
BankPulse example. Two rural co-operative banks lend to the same trader. The first is rated A by NABARD and may lend him up to 60 lakh. The second is rated C and may lend him only 25 lakh. Same borrower, same rulebook, and the ceiling is less than half, because the ceiling follows the bank's own marks.
8. Home loan by net worth
The home loan ceiling for one person depends on whether the bank's net worth reaches ₹100 crore. RBI's own table beside this point gives both amounts.
9. The two limits share room
A home loan and an ordinary loan to the same person are added together, not counted apart.
10. Nothing more once full
Once a home loan passes the ordinary ceiling, that person gets nothing further.
11. Unit and sector limits too
The unit ceiling runs off capital fund. The sector ceiling runs off lendable resources. Both follow the rating NABARD gives.
12. Figures from the audited sheet
The limits run off the audited balance sheet as on March 31.
13. All housing at five
All housing lending together stops at 5 percent of total assets.
14. Stay out of commercial property
The bank should keep away from commercial property lending altogether.
15. Builders of homes allowed
Loans to builders of housing projects are allowed inside the same five per cent.
16. Shops kept to a tenth
In such a project the commercial space may not pass 10 per cent of the built area.
17. Extra cover on those loans
These loans carry a standard asset provision of 0.75 per cent and a risk weight of 75 per cent.
Do it
18. One board policy needed
The board must approve one full policy covering these limits.
19. Set a purpose wise ceiling
That policy must fix a ceiling for each purpose it lends for.
20. Check the assets yourself
The policy must cover checking the assets in person, again and again.
21. Ask the Registrar first
Where needed the bank must get the Registrar's permission and fix its own bye-laws.
22. Judge big borrowers yourself
The bank must judge the credit risk itself, most of all for its bigger borrowers.
23. Board sees builder loans
A note on the builder loan book must go to the board every half year.
24. Return within fifteen days
The quarterly return goes to NABARD within 15 days of the quarter ending.
25. Report every breach
Every breach of these limits must be shown in the quarterly return.
Background
26. Keep inside the unit's funds
The bank may hold its lending to one unit within that unit's own net owned funds.
Chapter III. Repeal and other provisions
1. The old rules are gone
All earlier concentration risk instructions for these banks stand repealed.
2. Old actions still stand
Anything already done under the old rules is still judged by them.
3. Other laws still apply
These rules sit on top of other laws. They do not take the place of them.
4. RBI's reading is final
Where the wording is unclear, RBI's own reading of it is final.
The same subject for other kinds of institution
The same subject for other kinds of institution.
Other RBI rules for rural co-operative banks
RBI Kisan Credit Card rules for rural co-operative banks 2026
RBI capital adequacy rules for rural co-operative banks 2025
RBI credit bureau reporting rules for rural co-operative banks 2025
RBI customer service and fair conduct rules for rural co-operative banks 2025
RBI deposit interest rate rules for rural co-operative banks 2025
RBI digital banking channel rules for rural co-operative banks 2025
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