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RBI04 Aug 2026press-releasePrepared by Complied AI

Statement on Developmental and Regulatory Policies

The Reserve Bank of India has announced three key policy initiatives. First, it will resume the licensing of Urban Co-operative Banks (UCBs) on an 'on tap' basis, with draft guidelines to be issued for consultation. Second, the RBI is reviewing the 2008 Credit Monitoring Arrangement instructions for Rural Co-operative Banks (RCBs) to address concentration risk management, with draft amendment directions forthcoming. Finally, the RBI plans to rationalise the regulatory framework for interest rates on advances across all Regulated Entities (REs). This initiative aims to harmonize guidelines, standardize market practices such as day count conventions and benchmark reset dates, and improve transparency and consumer protection. Draft directions for these proposals will be released shortly for public comment.

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What changed

The Reserve Bank of India has announced three key policy initiatives. First, it will resume the licensing of Urban Co-operative Banks (UCBs) on an 'on tap' basis, with draft guidelines to be issued for consultation. Second, the RBI is reviewing the 2008 Credit Monitoring Arrangement instructions for Rural Co-operative Banks (RCBs) to address concentration risk management, with draft amendment directions forthcoming. Finally, the RBI plans to rationalise the regulatory framework for interest rates on advances across all Regulated Entities (REs). This initiative aims to harmonize guidelines, standardize market practices such as day count conventions and benchmark reset dates, and improve transparency and consumer protection. Draft directions for these proposals will be released shortly for public comment.

Who is affected
  • Urban Co-operative Banks (UCBs)
  • Rural Co-operative Banks (RCBs)
  • All Regulated Entities (REs)
Required action
  • Stakeholders are expected to review and provide feedback on upcoming draft guidelines and directions.

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Source details

Source
Reserve Bank of India
Type
press-release
Published by source
04 Aug 2026
Document number
2026-2027/811
Issuing division
Department of Communication
Coverage area
banking

Document text

Prepared for reading; wording retained from the source.

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August 05, 2026 Statement on Developmental and Regulatory Policies This Statement sets out various developmental and regulatory policy measures relating to regulations:

  1. Draft guidelines for licensing of Urban Co-operative Banks (UCBs) A discussion paper on Licensing of UCBs was published for stakeholder feedback on January 13, 2026 following a two decade pause on issuance of fresh licenses. On an analysis of the feedback, it has been decided to resume licensing of UCBs on ‘on tap’ basis. The draft guidelines will be issued shortly for stakeholder consultation.
  2. Review of Guidelines on Concentration Risk Management - Rural Co- operative Banks Prudential norms on Concentration Risk Management of Rural Co-operative Banks (RCBs) are governed by the Credit Monitoring Arrangement (CMA) instructions issued in 2008. As the banking sector in general, and co-operative banking sector in particular, have undergone significant expansion and changes since then, it has been decided to review these instructions, keeping in view the objectives of developing a vibrant co-operative sector while addressing the prudential concerns arising from concentrated lending. Draft Amendment Directions in this regard are being issued for wider stakeholder consultations.
  3. Review of Guidelines on Interest Rates on Advances

The Reserve Bank proposes to rationalise the regulatory framework on interest rates for all Regulated Entities (REs) on a principle-based basis. The proposed rationalisation aims to: (i) harmonise the guidelines across REs while maintaining proportionality; (ii) address certain operational aspects of the current framework on MCLR and EBLR; and (iii) standardise certain divergent market practices concerning interest charging, including day count convention and benchmark reset dates. These measures seek to ensure uniformity, enhance transparency in loan pricing, strengthen monetary transmission and bolster consumer protection. Draft directions incorporating these proposals will be issued shortly for public comments.

(Brij Raj)

Press Release: 2026-2027/811 Chief General Manager प्रेस प्रकाशनी PRESS RELEASE

भारतीय ᳯरज़वर् बᱹक

RESERVE BANK OF INDIA

वेबसाइट : www.rbi.org.in/hindi संचार ͪ वभाग, केंद्रȣय कायार्लय, शहȣद भगत ͧ संह मागर्, फोटर्, मुंबई - 400 001 Website : www.rbi.org.in Department of Communication, Central Office, Shahid Bhagat Singh Marg, Fort, ई-मेल/email : helpdoc@rbi.org.in Mumbai - 400 001 फोन/Phone: 022 - 2266 0502

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