Reserve Bank of India (Urban Co-operative Banks – Asset Liability Management) Directions, 2025
RBI master-direction RBI/DOR/2025-26/285 · 28 Nov 2025
RBI master-direction RBI/DOR/2025-26/285 · 28 Nov 2025
Summary
Check the official recordThe Reserve Bank of India issues these Directions to establish a framework for Asset Liability Management in Urban Co-operative Banks. The Directions mandate that banks implement systems to manage liquidity, interest rate, and currency risks. The Board of Directors or Board of Management must oversee risk policies, prudential limits, and system implementation. Banks must constitute an Asset Liability Management Committee to manage balance sheet risks, except for Level I banks. The Directions define specific reporting requirements for Structural Liquidity, Short-term Dynamic Liquidity, and Interest Rate Sensitivity statements based on the bank category. These Directions replace all previous Asset Liability Management guidelines for Urban Co-operative Banks and take effect immediately.
What you must do
Key dates
Who is affected
Thresholds
Exceptions
If you do not comply
RBI/DOR/2025-26/285
DOR.LRG.No.204/13-10-006/2025-26
November 28, 2025
Reserve Bank of India (Urban Co-operative Banks – Asset Liability Management) Directions, 2025
Table of Contents
Chapter I – Preliminary
A. Short Title and Commencement
B. Applicability
C. Definition
Chapter II – Role of the Board
A. Responsibilities of the Board
B. Board approval of policies, limits, and reviews
Chapter III – Asset Liability Management Governance
A. Introduction
B. ALM Information System
C. ALM Organization
D. ALM Process
Chapter IV – Liquidity Risk Management
A. Management of Liquidity Risk (also applicable to Level I UCB)
B. Structural Liquidity Statement (SLS)
C. Behavioural Patterns
D. Short-term Dynamic Liquidity statement (also applicable for Level I UCB)
E. Liquidity Adjustment Facility (LAF) and Marginal Standing Facility (MSF) for Scheduled UCB
Chapter V – Currency Risk
A. Management of Currency Risk (not applicable to Level 1 UCB)
Chapter VI – Interest Rate Risk (IRR) Management
A. Introduction
B. Traditional Gap Analysis
C. Interest Rate Sensitivity (IRS) statement
D. Behavioural Patterns
Chapter VII – Monitoring and Reporting
A. Preparation and Review of Statements
A.1 Scheduled UCB:
A.2 Non-Scheduled UCB (excluding UCB in Level I):
A.3 UCB in Level I:
B. Regulatory Reporting and Periodicity of Returns
B.1 Scheduled UCB:
B.2 Non-Scheduled UCB (excluding UCB in Level I):
B.3 UCB in Level I:
Chapter VIII – Repeal and Other Provisions
A. Repeal and Saving
B. Application of other laws not barred
C. Interpretations
Annex–I: Structural Liquidity Statement - Scheduled UCBs
Annex–II: Structural Liquidity Statement – Non-Scheduled UCBs
Annex-III: Short-term Dynamic Liquidity statement–UCBs
Annex–IV: Interest Rate Sensitivity Statement – Scheduled UCBs
Annex–V: Interest Rate Sensitivity Statement – Non-Scheduled UCBs
Annex-VI: Maturity Profile – Liquidity –Scheduled UCBs
Annex-VII: Maturity Profile – Liquidity –Non-Scheduled UCBs
Annex-VIII: Interest Rate Sensitivity – Scheduled UCBs
Annex-IX: Interest Rate Sensitivity – Non-Scheduled Urban Co-operative Banks (UCBs)
In exercise of the powers conferred by Section 35A, read with Section 56 of the Banking Regulation Act, 1949, and all other provisions / laws enabling the Reserve Bank of India (‘RBI’) in this regard, RBI being satisfied that it is necessary and expedient in the public interest so to do, hereby, issues the Directions hereinafter specified.
These Directions shall be called the Reserve Bank of India (Urban Co-operative Banks – Asset Liability Management) Directions, 2025.
These Directions shall become effective from the date of issue.
In this context, ‘Urban Co-operative Banks’ shall mean Primary Co-operative Banks as defined under section 5(ccv) read with Section 56 of the Banking Regulation Act, 1949.
(1) ‘Defeasance periods’ is the time taken to liquidate the position on the basis of liquidity in the secondary market.
(2) ‘Interest rate risk (IRR)’ is the risk where changes in market interest rates might adversely affect a UCB’s financial condition.
(3) ‘Level I UCB’, for the specific purpose of these Directions, shall mean:
(i) UCB having deposits below ₹100 crore operating in a single district,
(ii) UCB with deposits below ₹100 crore operating in more than one district will be treated as Level I provided the branches are in contiguous districts, and deposits and advances of branches in one district separately constitute at least 95 per cent of the total deposits and advances respectively of the UCB, and
(iii) UCB with deposits below ₹100 crore, whose branches were originally in a single district, but subsequently became multi-district due to reorganisation of the district.
The Board shall be responsible for overall management of risks, as also for the formulation of risk management policy and procedures, setting prudential limits, and establishing mechanisms for audit, reporting, and review in respect of forex risk (not applicable to a Level I UCB), liquidity risk, and interest rate risk (IRR), . The Board shall also oversee the implementation of the ALM system, and periodically review its functioning.
The Board may delegate the above responsibilities to the Board of Management (BoM), if BoM has been constituted by a UCB as per Reserve Bank of India (Urban Co-operative Banks – Governance) Directions, 2025.
The Board shall approve the internal prudential limits for cumulative mismatches (running total) across all time buckets of Structural Liquidity Statement (SLS) for monitoring by a UCB.
The Board shall approve the volume, composition, holding / defeasance period, cut loss, etc., in respect of the Trading Book of a UCB.
The Board shall ensure that various statements as provided in Chapter VII are placed by the UCB before it.
The Board shall approve prudential limits on individual gaps of Interest Rate Sensitivity (IRS) statement, which shall be based on Total Assets, Earning Assets or Equity (not applicable to a Level 1 UCB).
The Board shall ensure that the IRS statement, along with the analysis of Gaps and Earnings at Risk (EaR), are placed before the Board, and Board / the Top Management shall formulate corrective measures and devise suitable strategies wherever needed, as per information on the IRR provided in the statement (not applicable to a Level 1 UCB).
A UCB shall introduce an effective Asset Liability Management (ALM) system to address liquidity risk, IRR, and currency risk.
ALM, among other functions, provides a dynamic framework for measuring, monitoring and managing liquidity, interest rate, and foreign exchange (forex) risks. This involves assessment of various types of risks and altering balance sheet (assets and liabilities) items in a dynamic manner to manage risks.
These Directions shall serve as a benchmark. A UCB that has already implemented more sophisticated systems may continue using them. However, the UCB shall fine-tune its existing system to ensure compliance with the requirements set out in these Directions. A UCB shall also review its current Management Information System (MIS) and implement necessary enhancements as prescribed. Once the ALM system is stabilised and the UCB has gained sufficient experience, it shall prepare to transition to more sophisticated techniques for IRR management such as Duration Gap Analysis, Simulation, and Value at Risk.
A UCB shall implement its ALM process based on the following three pillars:
(1) ALM Information Systems, comprising:
(i) MIS.
(ii) Timely availability, accuracy, adequacy, and expediency of information.
(2) ALM Organisation, covering:
(i) Structure and responsibilities.
(ii) Level of Top Management involvement.
(3) ALM Process, comprising:
(i) Risk parameters.
(ii) Risk identification.
(i) Risk measurement.
(ii) Risk management.
(iii) Risk policies and procedures, prudential limits and auditing, reporting, and review.