Reserve Bank of India (Urban Co-operative Banks – Concentration Risk Management) Directions, 2025
UR
- Applies toUrban co-operative banks
- StatusIn force
- ImportanceMUST READ
- IssuedNov 28, 2025
- Last amendedApr 29, 2026 · 1 incorporated
- Length42 points in 5 sections · 4 min read
The four dates on this rule
- PublishedNov 28, 2025The day RBI put this document out.
- 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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39 of the 42 points name no product and bind every product. All products.
Numbers to remember
| 15 per cent | One borrower may not get more than 15 per cent of Tier-I capital. RBI Para 6(1) |
| 25 per cent | One group of linked borrowers may not get more than 25 per cent of Tier-I capital. RBI Para 6(2) |
| ₹25 lakh | A small value loan is up to ₹25 lakh, or 0.4 per cent of Tier-I capital if higher. One borrower is capped at ₹3 crore. RBI Para 9 |
| five per cent | All other property lending stops at five per cent of total loans. RBI Para 12 |
| 10 per cent | All unsecured lending together stops at 10 per cent of total assets. RBI Para 19 |
| 35 per cent | A bank lending almost all to priority sector may reach 35 per cent, with RBI's prior approval. RBI Para 21 |
| ₹40,000 | In that extra room, one borrower may not be given more than ₹40,000. RBI Para 21(1) |
| 9 per cent | The bank must hold capital of at least 9 per cent to use that room. RBI Para 21(2) |
| 7 per cent | Its gross bad loans must be no more than 7 per cent. RBI Para 21(3) |
| ₹10,000 | Small unsecured loans up to ₹10,000 sit outside the 10 per cent ceiling. RBI Para 22 |
| ₹0.25 lakh | A salary earners' bank may lend above the limits, from ₹0.25 lakh to ₹5 lakh. RBI Para 23 |
What it says
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 urban co-operative bank.
3. Sanctioned or outstanding, higher
The bank counts the higher of the sanctioned limit and the amount drawn.
4. Fully drawn term loans
For a fully drawn term loan the bank may count only the amount drawn.
5. Guarantees count in full
A guarantee or other non-funded limit is counted at its full value.
6. Loans on own deposits
A loan against the bank's own term deposit is left out.
7. The bank decides the group
The bank itself decides who belongs to a group. The test is common management and real control.
8. Common partners make a group
Firms sharing a partner and the same line of business count as one group.
9. Capital counted from March
Tier-I capital is taken as on March 31 of the year before.
Background
10. What the law calls them
In law these are primary co-operative banks under the Banking Regulation Act, 1949.
Chapter II. Exposure Norms
Must know
1. Fifteen per cent one borrower
One borrower may not get more than 15 per cent of Tier-I capital.
BankPulse example. An urban co-operative bank lends to one trader. Everything owed by that trader, funded and non-funded together, may not cross 15 per cent of the bank's Tier-I capital. Tier-I capital alone is the base here, not the wider capital funds other kinds of bank use.
2. Twenty five for a group
One group of linked borrowers may not get more than 25 per cent of Tier-I capital.
3. Shortfall deposits are left out
Money placed with NABARD and others for a priority sector shortfall is left out.
4. A second look in September
The bank may set a fresh limit using its share capital as on September 30.
5. Half year profit is out
Half yearly profit does not lift the ceiling. Only share capital does.
6. No lending on future capital
The bank may not lend against capital it only hopes to raise later.
7. What a small loan is
A small value loan is up to ₹25 lakh, or 0.4 per cent of Tier-I capital if higher. One borrower is capped at ₹3 crore.
8. Housing capped at twenty five
Home loans to individuals outside priority sector stop at 25 per cent of total loans.
9. Other property at five
All other property lending stops at five per cent of total loans.
10. Small builders are exempt
Working capital against building material for a small contractor is outside the limit.
11. No fresh property lending
A bank over the property limit may take no fresh property exposure until it has room.
12. Unsecured capped at ten
All unsecured lending together stops at 10 per cent of total assets.
13. Thirty five with RBI approval
A bank lending almost all to priority sector may reach 35 per cent, with RBI's prior approval.
14. Forty thousand for one borrower
In that extra room, one borrower may not be given more than ₹40,000.
15. Capital of nine per cent
The bank must hold capital of at least 9 per cent to use that room.
16. Bad loans under seven
Its gross bad loans must be no more than 7 per cent.
17. Ten thousand loans exempt
Small unsecured loans up to ₹10,000 sit outside the 10 per cent ceiling.
18. But fifteen is the stop
Even so, those loans together may not pass 15 per cent of total assets.
19. Salary banks may go higher
A salary earners' bank may lend above the limits, from ₹0.25 lakh to ₹5 lakh.
20. Nominal members capped
Nominal members may never be more than 20% of the regular members.
Do it
21. One board policy needed
The board must approve one full policy covering these limits.
22. Board sets the property cap
That policy must set the ceiling on total property lending.
23. Board reviews small loans
The board must be shown how the small loan book is behaving.
24. Board must fix the ceiling
The board itself must fix the ceiling against Tier-I capital.
25. Worked out after the audit
The ceilings are worked out each year once the balance sheet is audited.
26. Half the book stays small
At least 50 per cent of all loans must be small value loans.
27. Ask the other bank first
The bank may not lend to a borrower who banks elsewhere without a no objection letter.
Background
28. The limits date from 2020
These limits cover every fresh exposure taken after 13 March 2020.
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.
What RBI has fined people for under this rulebook
RBI has imposed 1 monetary penalty on this kind of lender. In each one its own stated reason names the subject of this rulebook. 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.
Dec 08, 2025. The Yavatmal Urban Co-operative Bank Ltd., Yavatmal, Maharashtra — ₹2.25 lakh (Rupees Two Lakh Twenty Five Thousand only). RBI press release
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.
How this rule has changed
The points above are the rule as it stands today, after every change listed here.
Issued on Nov 28, 2025. This is the date RBI put the rule out.
Changed on Apr 29, 2026. Takes effect From October 1, 2026. Exceptions and conditions are stated in the amendment..
- Unsecured advances meaning. Unsecured advances are loans not covered by the amount that can be got from valid security of the bank.
- Security value estimate. Banks must judge the amount they can realise from security in a practical and realistic way.
- Items treated unsecured. Clean overdrafts, some guarantees, clean bills, purchased cheques and similar drawals must be treated as unsecured advances.
- Receivables as security. Loans against receivables are secured only if those receivables originally have tenure not more than 180 days.
The same subject for other kinds of institution
The same subject for other kinds of institution.
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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