RBI revises the exposure limits to single and group borrowers for UCBs

Mar 19, 2020 | by Avantis RegTech Legal Research Team

Industry Specific Compliance

The Reserve Bank of India (RBI) on March 13, 2020, has revised the exposure limits for Primary (Urban) Co-operative Banks (UCBs). The UCBs were permitted to have exposures up to 15% and 40% of their capital funds to a single borrower and a group of borrowers, respectively. RBI has now decided that the prudential exposure limits for UCBs for a single borrower or party and a group of connected borrowers/parties shall be 15% and 25%, respectively, of their tier-I capital.

The UCBs shall bring down their existing exposures which are in excess of the revised limits to within the aforesaid revised limits by March 31, 2023. However, where the existing exposure comprises only term loans and non-fund-based facilities, while no further exposure shall be taken on such borrowers, these facilities may be allowed to continue as per their respective repayment schedule till maturity. The UCBs shall have at least 50 per cent of their aggregate loans and advances comprising loans of not more than Rs. 25 lakh or 0.2% of their tier I capital, whichever is higher, subject to a maximum of Rs.1 crore, per borrower or party.

RBI has also revised the Priority Sector Lending Target, which was previously 40% of the adjusted net bank credit (ANBC) or credit equivalent amount of off-balance sheet exposure (CEOBSE), whichever is higher. Now, the overall PSL target for UCBs shall stand increased to 75% of ANBC or CEOBSE, whichever is higher. The UCBs shall comply the target by March 31, 2024.

[Notification No. DOR (PCB).BPD.Cir No.10/13.05.000/2019-20]


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