Mumbai, Feb 10 The Reserve Bank of India has decided to raise the aggregate ceiling for unsecured loans given by urban co-operative banks to 20 per cent of total advances, from the existing limit of 10 per cent of total assets in the revised draft norms released on Tuesday.
The limits for individual unsecured advances within the aggregate ceiling of unsecured advances have been fixed at Rs 5 lakh for Tier 1, Rs 7.5 lakh for Tier 2, and Rs 10 lakh for Tier 3 and Tier 4 urban co-operative banks (UCBs).
The limit for lending to nominal members for the purchase of consumer durables is also proposed to be enhanced to Rs 2.5 lakh per borrower.
The draft norms state that the tenor of housing loans for Tier 1 and Tier 2 will not exceed 20 years, including the moratorium period, while Tier 3 and Tier 4 are permitted to determine the tenor of housing loans as per their board-approved policies.
The credit policy of a UCB must specify risk management and pricing strategies for housing loans, considering the life expectancy of the borrower and the longer duration of these exposures.
Feedback on the draft can be submitted on or before March 4, 2026. The amendments will come into force from October 1, 2026, or an earlier date when adopted by a UCB in entirety, the RBI statement said.
The moratorium on housing loans is extended only for the purpose of the construction of houses and shall not be allowed for loans for the acquisition of completed houses.
For Tier 1 and Tier 2 UCBs, moratorium periods in housing loans will be a maximum of 18 months from the date of first disbursement of the loan or the date of obtaining completion.
Tier 3 and Tier 4 UCBs may determine the moratorium periods in housing loans within the overall loan tenor as per board-approved policies.
Additionally, the tenor and moratorium requirements for housing loans are proposed to be deregulated for Tier 3 and Tier 4 UCBs.
The RBI said that a UCB may sanction loans to nominal members only if it has an enabling provision in its by-laws, in conformity with the applicable state co-operative Acts, for extending credit facilities to nominal members.
“Subject to the above, a UCB may grant the following loans to nominal members - loans for the purchase of consumer durables subject to a monetary ceiling of Rs 2.5 lakh per borrower, and loans against fixed deposit receipts, gold and silver ornaments, life insurance policies, and government securities, within the monetary ceiling as per its board-approved policy,” the RBI statement said.
The proposals were announced as part of the Statement on Developmental and Regulatory Policies dated 6th February, 2026. The draft directions have been issued by the RBI’s Department of Regulation for public comments.
The draft amendments cover concentration risk management, credit facilities, and financial statements, presentation and disclosures of Urban Co-operative Banks.
--IANS
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