Reserve Bank of India (Urban Co-operative Banks – Credit Facilities) Directions, 2025 (Updated as on April 01, 2026)

RBI/DOR/2025-26/277
DOR.CRE.REC.196/07-01-005/2025-26
November 28, 2025
Previous Versions

Reserve Bank of India (Urban Co-operative Banks – Credit Facilities) Directions, 2025 (Updated as on April 01, 2026)

Table of Contents

Introduction
Chapter I - Preliminary
A. Short Title and Commencement
B. Applicability
C. Definitions
Chapter II - Board Approved Policies
A. Role of Board
Chapter III - Digital Lending
A. General Requirements for bank-LSP Arrangements
B. Conduct and Customer Protection Requirements
C. Technology and Data Requirement
D. Reporting of Credit Information and DLAs
E. Loss sharing arrangement in case of default
F. General Provisions
Chapter IV - Lending against Gold and Silver Collateral
A. General Provisions
B. Restrictions and Ceilings
C. Valuation and Assaying of Gold and Silver collateral
D. Loan to Value Ratio (LTV)
E. Other Provisions
Chapter V - Microfinance
A. Definition of Microfinance
B. Assessment of Household Income
C. Limit on Loan Repayment Obligations of a Household
D. Other provisions
Chapter VI - Project Finance
A. Phases of Projects
B. Prudential Conditions Related to Sanction
C. Prudential Conditions Related to Disbursement and Monitoring
D. Other Provisions
Chapter VII - Non Fund Based (NFB) Credit Facilities
A. General Conditions
B. Guarantees
C. Usage of electronic-Guarantee
D. Guarantee favouring another RE
E. Co-acceptances
F. Guarantee and related business involving overseas current or capital account transaction
Chapter VIII - Housing Finance
A. Eligible Category of Borrowers
B. Eligibility for Housing Finance
C. Maximum Loan Amount & Margins
D. Interest rates
E. Foreclosure Charges / Prepayment Penalty
F. Reset of floating interest rate on EMI based housing loans
G. Penal charges and Key Facts Statement (KFS) for Loans & Advances
H. Security
I. Period of Loan
J. Graduated Instalments
K. Classification of Commercial Real Estate
L. Simultaneous Classification of CRE into other Regulatory Categories
M. Additional / Supplementary Finance
N. Lending to Housing Boards
O. Advances to Builders / Contractors
P. Housing Loans under Priority Sector
Q. Precautions
R. National Building Code
S. Procedure for ensuring the loan sought is for Authorised Structure
Chapter IX - Export Credit
A. Scope
B. Rediscounting of Export Bills Abroad
C. Pre-shipment Credit in Foreign Currency (PCFC)
D. Pre-shipment Credit in Foreign Currency (PCFC) – Clarifications
E. Extension of Facility of Pre-shipment Credit in Foreign Currency (PCFC) for Deemed Exports
F. Credit extended to Diamond Exporters Embargo on Import of Conflict Diamonds Liberia
G. Exports to Asian Clearing Union Countries - Granting of Export Credit in Foreign Currency under Pre-shipment Credit in Foreign Currency (PCFC), Export Bills Rediscounting (EBR) and Post-shipment Credit denominated in Foreign Currency (PSCFC) Schemes
H. Report of the Committee on Structure of Export Credit - Streamlining of Procedure for Loans and Advances with particular reference to Export Credit
I. Payment of Compensation to the Exporters in respect of Delayed Credit of Export Bills
J. Financing of Exports - Timely and Adequate Provision of Export Credit
K. Special Measures
Chapter X - Loans Against Financial Assets
A. Loans Against Shares
B. Bank Finance against Preference Shares and Long Term (Subordinated) Bonds
C. Advances against Fixed Deposit Receipts (FDRs) Issued by Other Banks
D. Advances by Salary Earners’ Primary (Urban) Co-operative Banks (SEBs) against Term Deposits of Non-members
Chapter XI - Discounting / Rediscounting of Bills by UCBs
Chapter XII - Bank Finance to Non-Banking Financial Companies (NBFCs)
A. Admission of NBFCs as Members
B. Activities eligible for finance to NBFCs engaged in Hire Purchase / Leasing Activities
C. Activities not Eligible for Finance to NBFCs engaged in Hire Purchase / Leasing Activities
D. Financing of NBFCs by Scheduled UCBs
Chapter XIII - Miscellaneous Provisions
A. Bridge Loans / Interim Finance
B. Grant of Loans for Acquisition of / Investing in Small Savings Instruments including Kisan Vikas Patras (KVP)
C. Lending to Public Sector Undertakings
D. Financing Equipment Leasing and Hire Purchase Financing
E. Financing for Agricultural Activities
F. Limits on unsecured advances
G. Restriction on Advances to Defaulters of Statutory Dues
H. Working Capital Requirements
Chapter XIV - Repeal and other provisions
A. Repeal and saving
B. Application of other laws not barred
C. Interpretations
Annex - I
Annex - II
Annex - III
Annex IV

Introduction

Reserve Bank of India (Reserve Bank) 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 Urban Cooperative Banks (UCBs) on the design and delivery of credit-related products and services. These Directions consolidate the instructions issued to Urban 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 being satisfied that it is necessary and expedient in the public interest so to do, hereby issues these Directions hereinafter specified.

Chapter I - Preliminary

A. Short Title and Commencement

1. These Directions shall be called the Reserve Bank of India (Urban Co-operative Banks – Credit Facilities) Directions, 2025.

2. These Directions shall come into effect immediately upon its issuance, unless indicated otherwise in specific cases.

B. Applicability

3. These Directions shall be applicable to Urban Co-operative Banks (hereinafter collectively referred to as ‘UCBs/banks’ and individually as a ‘UCB/bank’).

In this context, urban co-operative banks shall mean Primary Co-operative Banks as defined under Section 5(ccv) read with Section 56 of Banking Regulation Act, 1949.

C. Definitions

(1) For the purpose of these Directions, following definitions shall apply:

• (i) ‘Actual Date of Commencement of Commercial Operations’ (DCCO) means the date on which the project is put to commercial use and completion certificate / provisional completion certificate / occupancy certificate (in case of CRE and CRE-RH projects) or its equivalent is issued to the concessionaire / project developer / promoter.
• (ii) ‘Annual Percentage Rate (APR)’ means APR as defined under Reserve Bank of India (Urban Co-operative Banks – Responsible Business Conduct) Directions, 2025.
• (iii) ‘Appointed Date’ means the date, as defined in the concession agreement entered into between the concessionaire and the concession granting authority, on which the concession agreement comes into force in accordance with the terms outlined therein (applicable only in the case of infrastructure projects under Public Private Partnership (PPP) model).
• (iv) ‘Beneficiary’ means the party in whose favour the NFB facility is issued by a RE.
• (v) ‘Bullet Repayment Loans’ means loans where both principal and interest are due for payment at the maturity of the loan.
• (vi) ‘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.
• (vii) ‘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.
• (viii) ‘Consumption Loan’ means any permissible loan that does not fit the definition of ‘income generating loan’ as defined subsequently.
• (ix) ‘Credit Event’ in the context of project finance exposures, shall be deemed to have been triggered on the occurrence of any of the following:
  • (a) Default with any lender.
  • (b) Any lender(s) determines a need for extension of the original / extended DCCO, as the case may be, of the project.
  • (c) Expiry of original / extended DCCO, as the case may be.
  • (d) Any lender(s) determines a need for infusion of additional debt.
  • (e) The project is faced with financial difficulty.