The Reserve Bank of India today released draft circular on limits on exposure to single and group borrowers/parties, large exposures and revision in priority sector lending targets for primary (urban) co-operative banks (UCBs) for feedback/ suggestions. The circular stipulates that the prudential exposure limits for UCBs for a single borrower/party and a group of connected borrowers/parties shall be 10% and 25%, respectively, of their Tier I capital and that at least 50% of their loan portfolio shall comprise loans not more than ₹25 lakh per borrower/party. It further stipulates that the target for loans and advances to priority sector for UCBs shall stand increased to 75% of adjusted net bank credit or credit equivalent amount of off-balance sheet exposure, whichever is higher, by March 31, 2023. An appropriate glide path is proposed to be provided to UCBs for compliance with the aforesaid norms/limits/targets.

The above measures are expected to reduce credit concentration risk of the UCBs and promote financial inclusion.

Comments on the draft circular may be forwarded by January 20, 2020 to:

The Chief General Manager
Department of Regulation
Reserve Bank of India
C-7, 1st & 2nd Floor
Bandra Kurla Complex, Bandra (E)
Mumbai – 400051

Or by email with subject line “Limits on exposure to single and group borrowers/parties and large exposures and Revision in priority sector lending targets - UCBs”.

(Yogesh Dayal)    
Chief General Manager

Press Release: 2019-2020/1541