The Reserve Bank of India has amended its 2025 credit facilities directions for urban co operative banks, revising rules for housing finance, credit against deposits and unsecured lending limits. The changes cap housing loan tenor for Tier 1 and Tier 2 urban co operative banks at 20 years including any moratorium, allow Tier 3 and Tier 4 banks to set tenor and moratorium under Board approved policies, prohibit credit facilities against fixed or term deposits of other banks, and set new unsecured advance limits to a single borrower at INR 500,000 for Tier 1, INR 750,000 for Tier 2, and INR 1 million for Tier 3 and Tier 4, within the aggregate ceiling under the concentration risk management framework. For housing loans, moratoriums may be granted only for under construction properties and only up to the date of completion of construction, subject for Tier 1 and Tier 2 banks to a maximum of 24 months from first disbursement. Moratoriums are not permitted for loans to acquire completed houses. The credit policy of each urban co operative bank must at minimum cover risk management and pricing strategies for housing loans, including consideration of borrower life expectancy and the longer duration of these exposures. On lending against deposits, banks must have a Board approved policy that specifies, among other things, margin requirements at all times, while any such lending to non members remains subject to the relevant enabling provisions of applicable co operative societies legislation. The amendments take effect from October 1, 2026, or earlier if a bank adopts them in full. Early adoption requires simultaneous adoption of these changes and the amendments issued under the Reserve Bank of India urban co operative banks concentration risk management directions.

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