Reserve Bank of India (Regional Rural Banks – Concentration Risk Management) Directions, 2025
UR
- Applies toRegional rural banks
- StatusIn force
- IssuedNov 28, 2025
- Amendmentsnone tracked
- Length34 points in 5 sections · 3 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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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 regional rural bank.
3. What owned funds means
Owned funds are paid-up capital, the statutory reserve, other free reserves and profit in hand.
4. Government money counts too
Share capital put in by the Central Government and the sponsor bank is counted.
5. Losses come off
Losses carried forward and any shortfall in provisions are taken out.
6. Bad loan reserves are out
Money set aside for bad loans and for fallen investments does not count.
7. Revaluation gains are out
Reserves made by revaluing buildings and land do not count either.
8. Sanctioned or outstanding, higher
The bank counts the higher of the sanctioned limit and the amount drawn.
9. Fully drawn term loans
For a fully drawn term loan the bank may count only the amount drawn.
10. A guarantee counts in full
A guarantee or other non-funded limit is counted at its full value.
11. Better not to lend groups
RBI says a regional rural bank should not be financing group borrowers at all.
12. The test for a group
The test is common management and real control.
Do it
13. If you do, name them
Where the bank does lend a group, it must set up a way to identify that group.
Background
14. What a sponsor bank is
The sponsor bank is the bank that set the regional rural bank up.
Chapter II. Exposure Norms
Must know
1. Fifteen and forty per cent
One borrower may get up to 15 per cent of owned funds. One group may get up to 40 per cent.
BankPulse example. A regional rural bank lends to one shopkeeper and to other firms of his family. What that one shopkeeper owes may not cross 15 per cent of the bank's owned funds. Everything the family owes together may not cross 40 per cent. Owned funds is the base here, and it is not the same measure any of the other six rulebooks use.
2. Sponsor bank bonds at ten
Money put into Tier-II bonds of the sponsor bank or any bank stops at 10 per cent of owned funds.
3. Shares and funds at five
Shares, debentures and mutual fund units stop at 5 per cent of the deposit growth.
4. Deposit growth from last year
The share investment limit runs off the deposit growth of the year before.
5. The second hand market counts
Buying those shares from the open market counts against the same limit.
6. Government company bonds free
Bonds of a company the government owns more than half of are outside that limit.
7. The share law still binds
The bank must still follow the Banking Regulation Act rule on holding shares in a company.
8. Sharing a loan with sponsor
Certificates that share a loan with the sponsor bank stay within 15 per cent of the year's fresh lending.
9. Top up loans unsecured
A top up loan against a vehicle is treated as unsecured.
Do it
10. Write the loan policy down
The bank must have a set of written loan policies.
11. Name the limits in it
Those policies must state the single borrower and group limits plainly.
12. Papers, sectors and powers
They must also cover paperwork standards, sector limits and who may sanction what.
13. Board checks the spread
The board must look at how widely the lending is spread.
14. Lend small, lend wide
The bank must aim at many smaller borrowers rather than a few large ones.
15. Unsecured consumer credit limits
The board must set a limit for every unsecured consumer loan.
16. The risk committee watches
The risk management committee must watch those limits all the time.
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 regional rural banks
RBI credit bureau reporting rules for regional rural banks 2025
RBI credit card and debit card rules for regional rural banks 2025
RBI customer service and fair conduct rules for regional rural banks 2025
RBI deposit interest rate rules for regional rural banks 2025
RBI digital banking channel rules for regional rural banks 2025
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