Reserve Bank of India (Urban Co-operative Banks – Asset Liability Management) Directions, 2025
UR
- Applies toUrban co-operative banks
- StatusIn force
- IssuedNov 28, 2025
- Amendmentsnone tracked
- Length54 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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Stated by RBI — RBI’s own paragraph says this. We have only made it plainer.
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Needs judgement — RBI leaves this to the bank to settle, so nobody can give you a fixed number here.
Opening paragraphs
1. What this book does
This book sets how an urban 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 urban 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
1. Put the statements up
The board must be shown the statements this book requires.
2. It may delegate
The board may hand these duties to a Board of Management where the bank has formed one.
3. Limits on running gaps
The board approves limits on the running total of mismatches across every time bucket.
4. Sign off the trading book
The board approves the size, mix, holding period and cut-loss of the trading book.
5. Limits on each gap
The board approves limits on each gap, set against total assets, earning assets or equity.
Chapter III. Asset Liability Management Governance
Do it
1. Put a system in place
A bank must run a working system to handle liquidity risk, interest rate risk and currency risk.
2. Policy and control
Risk policies, procedures and limits support it. Senior management must build sound internal control.
3. Set up an ALCO
A bank must form a committee headed by the chief executive or the secretary.
4. Stay inside the limits
Every operation must stay inside the limits the board set.
Background
5. Not for the smallest
This chapter does not bind a Level 1 bank unless it says so.
6. A moving frame
The work gives a moving frame for measuring and managing liquidity, interest rate and forex risk.
7. A floor, not a ceiling
These rules are the benchmark. A bank with a better system may keep it.
8. Three pillars
The system rests on information, organisation and process.
9. What the ALCO decides
The committee plans the balance sheet for risk and return.
10. Who sits on it
The size and make-up of the committee follow the size and business of the bank.
11. The support group
Operating staff form support groups. They study the risk profile and report it to the committee.
12. What ALM covers
The work covers liquidity risk, interest rate risk and trading risk.
Chapter IV. Liquidity Risk Management
Must know
1. Split the first bucket
A scheduled bank must break the 1 to 14 day bucket into finer pieces.
BankPulse example. A scheduled urban co-operative bank cannot leave the 1 to 14 day bucket whole. It splits into next day, 2 to 7 days, and 8 to 14 days. Three buckets replace one.
2. A published eligible list
RBI publishes which scheduled banks may use those windows and which may not.
Do it
3. Measure it all the time
A bank must measure liquidity continuously. It must test how that position would look under stress.
4. Track the running total
A bank must watch its running mismatch across every bucket against board-approved limits.
5. Count the forex flows
A bank dealing in foreign exchange must count those rupee flows in its liquidity statement.
BankPulse example. A bank licensed to deal in foreign exchange sells dollars for rupees. The rupee inflows and outflows from that business must go into the liquidity statement. Leaving them out understates the picture.
Background
6. Static, not hopeful
The liquidity statement is drawn without counting on future business growth.
7. Two maturity profiles
Scheduled and non-scheduled banks use different maturity profiles to capture their cash flows.
8. Place flows when they fall
Every inflow and outflow sits in the bucket where it is expected.
9. Set tolerance levels
Tolerance for mismatch is fixed from the bank's own profile, its business and its plans.
10. Show securities by residual
Statutory liquidity securities and other investments sit in the bucket matching their remaining maturity.
11. ALCO signs off the book
The committee, or the board at a Level 1 bank, approves the trading book's size, mix and holding period.
12. Estimate the near term
Short-term liquidity is estimated from business projections and other commitments.
13. An extra liquidity window
RBI's liquidity and marginal standing facilities are open to scheduled banks as another source.
14. The list is kept current
RBI reviews that list as it goes, to see the financial tests are still met.
Chapter V. Currency Risk
1. Gap limits on forex
A bank authorised to deal in foreign exchange must set gap limits and use a value at risk approach.
2. Currency risk counts
A mismatched currency position exposes the balance sheet to exchange rate movement.
Chapter VI. Interest Rate Risk (IRR) Management
Do it
1. Build the measuring system
A bank must put in systems to measure and manage interest rate risk.
Background
2. Two ways to see it
Interest rate risk hits profits at once through net interest income.
3. Start with gap analysis
A bank starts with traditional gap analysis, using suitable tools.
4. Work out the difference
Under gap analysis a bank measures the difference between rate sensitive assets and liabilities.
5. What counts as sensitive
Anything that matures, has a cash flow or reprices inside the period is rate sensitive.
6. Loan instalments count
Repayments of loan instalments count as rate sensitive if they fall in the period.
7. Reference rates reprice
An item tied to a reference rate is rate sensitive at the time that rate resets.
8. Rupees only
Only rupee assets, liabilities and off-balance sheet positions go into the rate statement.
BankPulse example. A bank holds both rupee and dollar positions. Only the rupee assets, liabilities and off-balance sheet positions go into the rate statement. The dollar side is left out.
9. Group by the earlier date
Items are grouped by residual maturity or by the next repricing date, whichever comes first.
BankPulse example. A loan matures in 3 years but reprices in 6 months. It is grouped by the repricing date, because that comes first. A loan that never reprices is grouped by its residual maturity.
10. Which way the gap cuts
A positive gap may gain from rising rates. A negative gap gains from falling ones.
11. Limits with board approval
The board approves a limit on each gap, set against total assets, earning assets or equity.
Chapter VII. Monitoring and Reporting
1. Follow the returns rules
Filing follows RBI's Supervisory Returns Directions of 27 February 2024.
2. Name who signs
Returns must be correct and on time, and one or two senior officers must be named to sign them.
Chapter VIII. Repeal and Other Provisions
1. Old instructions repealed
The old rules on this subject were repealed by RBI's own circular.
BankPulse example. A compliance officer keeps an old circular on the same subject in the manual. It no longer applies. The existing directions, instructions and guidelines on these areas stand repealed. Only this rulebook governs them now.
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.
RBI liquidity and asset liability rules for all India financial institutions
RBI liquidity and asset liability rules for commercial banks
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 rural co-operative banks
RBI liquidity and asset liability rules for small finance banks
Other RBI rules for urban co-operative banks
RBI capital adequacy rules for urban co-operative banks 2025
RBI compliance officer and compliance function rules for urban co-operative banks
RBI concurrent audit rules for urban co-operative banks 2026
RBI credit bureau reporting rules for urban co-operative banks 2025
RBI credit card and debit card rules for urban co-operative banks 2025
RBI customer service and fair conduct rules for urban co-operative banks 2025
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