Reserve Bank of India revises prudential norms for urban co-operative banks on small value loans real estate exposure and security receipts provisioning

The Reserve Bank of India has issued revised prudential instructions for Primary (Urban) Co-operative Banks (UCBs), rationalising requirements on small value loans, real estate exposures and provisioning for investments in security receipts, and superseding earlier circulars. The changes apply with immediate effect. For small value loans, the definition has been revised to loans of value not more than INR 25 lakh or 0.4 per cent of Tier I capital, whichever is higher, subject to a ceiling of INR 3 crore per borrower, while the existing glidepath (including intermediate targets) to reach at least 50 per cent of aggregate loans and advances in small value loans by March 31, 2026 remains unchanged. For real estate exposures, aggregate exposure to residential mortgages (housing loans to individuals) other than those eligible for priority sector classification is capped at 25 per cent of total loans and advances, and aggregate exposure to the real estate sector excluding housing loans to individuals is capped at five per cent of total loans and advances; individual housing loan ceilings per dwelling unit are set at INR 60 lakh (Tier 1), INR 1.40 crore (Tier 2), INR 2 crore (Tier 3) and INR 3 crore (Tier 4), subject to extant single borrower exposure limits. On provisioning for security receipts (SRs) held against assets transferred to asset reconstruction companies, the glidepath for providing for the valuation differential on specified SRs has been extended by two years to FY2027-28, with any provisions already made required to be maintained. All other provisions of the Master Direction on Transfer of Loan Exposure continue to apply.