RBI Relaxes Lending Norms for Urban Co-operative Banks

The Reserve Bank of India (RBI) has revised norms for Urban Co-operative Banks (UCBs), allowing them to increase exposure to residential mortgages and providing them greater operational freedom. UCBs can now have up to 25% of their loans as residential mortgages. Revised small value loan definitions aim to enhance flexibility.

The Reserve Bank of India (RBI) has issued new guidelines, enabling Urban Co-operative Banks (UCBs) to allocate a larger portion of their lending to residential mortgages.

Previously capped at 10% of total assets, UCBs can now extend up to 25% of their total loans and advances to housing loans, aiming to offer these banks greater operational latitude while maintaining regulatory standards.

The revised policy also alters small value loan definitions, setting their ceiling at Rs 3 crore per borrower. This adjustment, effective in phases until March 2026, is expected to help UCBs better serve their clientele and adapt to evolving market conditions.

(With inputs from agencies.)