Reserve Bank of India (Rural Co-operative Banks – Credit Facilities) Directions, 2025 (Updated as on April 01, 2026)

1. Legal basis

RBI issues these Directions using its own legal powers, in the public interest.

1. Lending rules for RCBs

This document sets the lending rules for rural co-operative banks.

2. Start date

These Directions took effect on the day the Reserve Bank issued them.

3. Who is covered

These Directions apply to every rural co-operative bank.

1. Outsourcing does not shift blame

Outsourcing never dilutes the lender's own regulatory duties.

2. No dark patterns

Displayed content must be unbiased and must not push one lender's product.

3. No silent limit increase

A credit limit cannot rise on its own; the borrower must ask and the request must be recorded.

4. Money to the borrower

Loan money must reach the borrower's own account. It cannot go to a partner's account.

5. No third party in between

The flow of money between borrower and lender cannot be controlled by a third party.

6. Bank pays the partner

The bank pays its lending partner. The partner cannot collect those charges from the borrower.

7. One day to walk away

The cooling off period is set in the credit policy and can never be shorter than one day.

8. No biometric data

Biometric data must not be collected or stored unless a statute allows it.

9. Data back in a day

Data processed abroad must be deleted there and brought back within 24 hours.

10. A guarantee is not underwriting

A default loss guarantee cannot stand in place of proper credit appraisal.

11. Not on revolving credit

Default loss guarantees are barred on revolving credit and on credit cards.

12. Default guarantee cap

The guarantee cover agreed up front cannot be more than 5 percent of the money paid out of that loan pool.

13. Guarantee cover capped

The guarantee giver cannot carry the risk of more than five per cent of the loan pool.

14. 120 days to invoke cover

The bank must call in that guarantee within 120 days of the loan falling overdue.

15. Review the provider's conduct

The service provider's conduct against the contract must be reviewed from time to time.

16. Watch the loans they source

The policy must set out how loan books sourced through service providers are monitored.

17. Show every matching offer

The borrower must be shown a digital view of every matching loan offer.

18. Same treatment for like borrowers

Borrowers in the same position must be matched to lenders by a consistent method.

19. What the offer must state

Each offer must name the lender and state the amount, the tenor, the annual rate and the monthly outgo.

20. Key Fact Statement

A Key Fact Statement must be given to the borrower.

21. Publish the lending details

The lender must keep a public website carrying its digital lending details in one place.

22. Money moves directly

Repayments must reach the lender's account directly, with no pass-through or pool account in between.

23. A named grievance officer

A nodal grievance redressal officer must be named for digital lending complaints.

24. Show the officer's contact

The officer's contact details must appear on the website, the app and the Key Fact Statement.

25. Complain from the app

A complaint must be capable of being lodged from the lending app itself.

26. Collect only what is needed

Data collection must be need-based, with the borrower's prior explicit consent and an audit trail.

27. Data stays in India

All data must sit on servers located in India.

28. A published privacy policy

A comprehensive privacy policy must be published on the website and the app.

29. Name the data collectors

The privacy policy must name the third parties allowed to collect data through the app.

30. Guarantor must be a company

A service provider giving a default loss guarantee must be a company under the Companies Act.

31. Test the guarantor's capacity

Before each guarantee arrangement or renewal, the guarantor's ability to pay must be established.

32. Guarantee outlives the loans

The guarantee agreement must run at least as long as the longest loan it covers.

33. Contract before any lending

Digital lending through a service provider needs a written contract setting out each side's duties.

34. Know the borrower's means

Creditworthiness must be assessed from the borrower's own economic profile before any loan.

35. Lender pays the provider

Fees due to a service provider are paid by the lender, not collected from the borrower.

36. Free exit window

A borrower may leave a digital loan during the cooling-off period without paying a penalty.

37. Consent can be withdrawn

The borrower may refuse, restrict or withdraw consent and ask for the data to be deleted.

38. Ask before sharing

Personal information goes to a third party only with explicit consent or under law.

39. Providers store almost nothing

A service provider may hold only basic contact data about the borrower.

40. Listing is not approval

Appearing on the Reserve Bank's list confers no registration, authorisation or endorsement.

41. Borrower still owes the loan

Invoking the guarantee does not reduce what the borrower owes on the underlying loan.

1. Full check above ₹2.5 lakh

A loan above ₹2.5 lakh against gold or silver needs a full repayment capacity check.

BankPulse example. A borrower has a gold loan of ₹2 lakh and asks for another ₹1 lakh. The total against the collateral becomes ₹3 lakh. That is above ₹2.5 lakh, so a full repayment capacity check is needed.

2. Barred gold lending

Banks cannot lend against primary gold, silver, or financial assets backed by them.

3. Ownership must be clear

A bank cannot lend where the ownership of the pledged metal is in doubt.

4. No re-pledging of gold

A bank cannot raise its own loan by re-pledging gold or silver that borrowers pledged to it.

5. Bullet loan tenor

A consumption loan repaid in one payment at the end cannot run beyond 12 months.

6. One-kilogram pledge cap

A borrower's pledged gold ornaments cannot together exceed 1 kilogram.

7. Coin weight limit

Coins pledged by one borrower cannot cross 50 grams of gold or 500 grams of silver.

8. ₹2.5 lakh to ₹5 lakh

A consumption loan between ₹2.5 lakh and ₹5 lakh may not exceed 80 per cent of the pledged value.

9. Papers for priority lending

The policy must also list the papers to collect and keep for priority sector loans.

10. Valued at actual purity

Gold or silver must be valued at the reference price for its real purity.

11. Loan ratio held throughout

The loan to value ratio must hold for the whole life of the loan.

12. Renewal within the ratio

A renewal or top-up is allowed only within the permitted ratio and while the loan is standard.

13. Bullet repayment loans

On a bullet repayment loan the ratio is worked out on the total amount repayable at maturity.

1. Microfinance income ceiling

A microfinance loan goes to a household earning up to ₹3,00,000 a year.

2. Three lakh income test

A collateral-free loan to a household earning up to three lakh rupees a year is microfinance.

3. Half of monthly income

Loan repayments cannot cross half of the household's monthly income.

4. Half the household income

All loan repayments of a household together cannot exceed half of its monthly income.

5. Household income policy

The Board must approve a policy for judging household income before a microfinance loan.

6. Income sent to bureaus

The bank must report the household income it assesses to the credit information companies.

7. Repayment limit policy

The Board must also approve a policy that caps monthly loan repayments against income.

8. Flexible repayment offered

The Board must approve a policy letting microfinance borrowers choose how often they repay.

9. Household defined

A household here means the husband, the wife and their unmarried children.

10. Every loan counted

That count includes every other loan of the household, whether secured or not.

11. Old loans run their course

Loans already above the repayment ceiling are allowed to run to maturity.

12. No fresh loan above cap

No new loan may be given until the household comes back within that limit.

1. Ceilings on guarantees

The bank must set its own limits on guarantees, and tighter limits on unsecured guarantees.

2. Guarantee must be honoured

A bank must honour its guarantee when it is invoked, unless a court stops it.

3. Watch how guarantees are used

The bank must track that guaranteed money is used for the business need it was given for.

1. Old actions preserved

Anything already done under the old rules stays governed by those old rules.

2. Approvals carried over

Approvals given under the cancelled rules are now treated as given under these rules.

3. Other laws still apply

These Directions add to other laws. They do not replace any of them.

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.