RBI master-direction RBI/DOR/2025-26/302 · 28 Nov 2025
Official title
Reserve Bank of India (Rural Co-operative Banks – Credit Facilities) Directions, 2025 (Updated as on April 01, 2026)
Summary
Check the official recordThese Directions consolidate regulatory instructions for State Co-operative Banks and Central Co-operative Banks regarding credit facilities. The framework covers board-approved policies for digital lending, gold and silver collateral, microfinance, housing loans, and non-fund based facilities. It mandates specific due diligence for bank-Lending Service Provider (LSP) arrangements, including data privacy and grievance redressal requirements. The Directions set caps on Default Loss Guarantees (DLG) at five percent of the loan portfolio and define eligibility for microfinance loans based on household income. It also establishes housing loan limits based on bank net worth and restricts upfront disbursal for under-construction projects. These rules apply to all Rural Co-operative Banks, repealing previous instructions while preserving ongoing legal proceedings.
What you must do
Key dates
Who is affected
Thresholds
Exceptions
If you do not comply
RBI/DOR/2025-26/302 DOR.CRE.REC.No.221/07-01-006/2025-26 November 28, 2025 Previous Versions Reserve Bank of India (Rural Cooperative Banks – Credit Facilities) Directions, 2025 (Updated as on April 01, 2026)
Reserve Bank of India is statutorily mandated to operate the credit system of the country to its advantage. In pursuit of this mandate, the Reserve Bank encourages innovation in the financial systems, credit products and delivery mechanisms while ensuring orderly growth, financial stability and the protection of depositors’ and borrowers’ interest. With the progressive deregulation of bank credit, prudential norms primarily serve as regulatory safeguards. These norms, issued from time to time, provide guidance to regulated entities on the design and delivery of credit-related products and services. These Directions consolidate the instructions issued to Rural Co-operative Banks i.e., State Co-operative Banks and Central Co-operative Banks on credit facilities.
Accordingly, in exercise of powers conferred by Section 21, 35A and 56 of the Banking Regulation Act, 1949; the Reserve Bank of India being satisfied that it is necessary and expedient in the public interest so to do, hereby issues these Directions hereinafter specified.
In this context, rural co-operative banks shall mean State Co-operative Banks and Central Co-operative Banks, as defined in the National Bank for Agriculture and Rural Development Act, 1981.
(1) For the purpose of these Directions, following definitions shall apply:
(i) Annual Percentage Rate (APR) means APR as defined under the Reserve Bank of India (Rural Co-operative Banks – Responsible Business Conduct) Directions, 2025.
(ii) ‘Beneficiary’ means the party in whose favour the NFB facility is issued by a RE.
(iii) ‘Bullet Repayment Loans’ means loans where both principal and interest are due for payment at the maturity of the loan.
(iv) ‘Co-acceptance of bills’ means an undertaking to make payment to the drawer of the bill (seller/ exporter) on due date if the buyer/ importer fails to make the payment on that date.
(v) ‘Collateral Security’ or ‘Collateral’ means an existing asset of the borrower pledged to the lender for availing and securing a credit facility extended by the lender to the borrower.
(vi) ‘Consumption Loan’ means any permissible loan that does not fit the definition of ‘income generating loan’ as defined subsequently.
(vii) ‘Default Loss Guarantee’ (DLG) means a contractual arrangement, called by whatever name, between the bank and another entity, under which the latter guarantees to compensate the bank, for the loss due to default up to a certain percentage of the loan portfolio of the bank, specified upfront. Any other implicit guarantee of similar nature, linked to the performance of the loan portfolio of the bank and specified upfront, shall also be covered under the definition of DLG.
(viii) ‘Digital Lending’ means a remote and automated lending process, largely by use of seamless digital technologies for customer acquisition, credit assessment, loan approval, disbursement, recovery, and associated customer service.
(ix) ‘Digital Lending Apps / Platforms’ (DLAs) means a mobile and / or web-based applications, on a standalone basis or as a part of suite of functions of an application with user interface that facilitate digital lending services. DLAs shall include applications of the bank as well as those operated by Lending Service Provider (LSP) engaged by bank for extending any credit facilitation services in conformity with extant outsourcing guidelines issued by the Reserve Bank.
(x) ‘Central Cooperative Bank (CCB)’ means the principal co-operative society in a district in a State as defined under Section 2(d) of National Bank for Agriculture and Rural Development Act, 1981.
(xi) ‘Guarantee’ means a contract to perform the promise, or discharge the liability, of a third person in the contingent case of his non-performance or default, in terms of The Indian Contract Act, 1872.
(xii) ‘Guarantor’ refers to the party which issues the guarantee.
(xiii) ‘Income Generating Loan’ means loans extended for the purpose of productive economic activities, such as farm credit, loans for business or commercial purposes, loans for creation or acquisition of productive assets etc.
(xiv) ‘Jewellery’ means items that are designed to be worn as personal adornments.
(xv) ‘Lending Service Provider’ (LSP) means an agent of a bank (including another lender) who carries out one or more of bank’s digital lending functions, or part thereof, in customer acquisition, services incidental to underwriting and pricing, servicing, monitoring, recovery of specific loan or loan portfolio on behalf of bank in conformity with extant outsourcing guidelines issued by the Reserve Bank.
Provided that while entities offering only Payment Aggregator (PA) services in terms of the extant instructions issued by the Reserve Bank shall remain out of the ambit of these Directions, any PA also performing the role of an LSP shall comply with Chapter III of these Directions.
(xvi) ‘Obligor’ means a party against whose obligations, financial or otherwise, a NFB facility has been issued. In the case of guarantees, the obligor may also be termed as ‘principal debtor’, as defined under the Indian Contract Act, 1872.
