UCB Unsecured Loan Cap: RBI Draft Norms Raise Limit
Why in the news
RBI released draft norms revising how much unsecured lending Urban Cooperative Banks (UCBs) may do, while redefining unsecured advances.
Key facts
- Proposed ceiling: 20% of preceding year’s total advances, replacing 10% of total assets.
| UCB tier | Individual unsecured limit |
|---|---|
| Tier I | ₹5 lakh |
| Tier II | ₹7.5 lakh |
| Tier III and IV | ₹10 lakh |
About unsecured loans
Loans without collateral, so no specific asset can be claimed on default. Examples: personal, credit card, consumer durable, education, short-term business loans.
Exam angle
- Base changes from assets to advances; status is draft.