RBI Eases Urban Co-operative Bank Loan and Housing Limits
Why in the news
RBI relaxed rules on Urban Co-operative Banks (UCBs) for small-value lending and real estate exposure, with risk management kept in place.
Key facts
- Small loan limit: was ₹25 lakh or 0.2% of Tier I capital (max ₹1 crore per borrower); now ₹25 lakh or 0.4% (max ₹3 crore).
- Target: 50% of loans to be small-value by March 31, 2026; boards must monitor quality and may lower the limit.
- UCBs may exceed the 10% cap on real estate project loans by 5% for priority-sector housing.
- Non-priority housing loans: up to 25% of total loans; other real estate: up to 5%.
| UCB tier | Housing loan cap per dwelling unit |
|---|---|
| Tier I | ₹60 lakh |
| Tier II | ₹1.4 crore |
| Tier III | ₹2 crore |
| Tier IV | ₹3 crore |
Significance
- More room for growth and housing finance; competition with commercial banks may rise.
Exam angle
- New per-borrower small loan ceiling: ₹3 crore.