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Corporate Laws Central Ministry of Finance Reserve Bank of India Act, 1934

Review and rationalization of prudential norms - UCBs

24-Feb-2025 | RBI/2024-2025/118 DOR.CRE.REC.62/07.10.002/2024-25

RBI has issued a circular regarding the Review and rationalization of prudential norms - UCBs effective from, 25th February, 2025. Key Highlights- 1. The norms consist of small-value loans, exposure ceilings on housing and real estate loans, and provisioning requirements for investment in Security Receipts (SRs). 2. The definition of a small value loan has been revised, as loans of value not more than INR 25 lakh (earlier INR 25 lakh), or 0.4 % of their Tier I capital (earlier 0.2%), whichever is higher, subject to a maximum of the ceiling of INR 3 crore per borrower (earlier INR 1 crore). 3. Revised limits of exposure of Urban cooperative banks to Aggregate Housing or Real estate and Individual housing loans have been specified. Additionally, UCB can lend to an individual for housing Tier-1 UCBs, the maximum loan to a single person is 60 lakh, and to other UCBs, 40 lakh per person. 4. For Valuation on the SRs five-year glide path (till FY2025-26) was provided in respect of such SRs as on the date of issuance of MD-TLE, i.e. September 24, 2021 (specified SRs) The same has been extended for an additional 2 years till FY 2027-28. However, any provisions already made for the specified SRs shall continue to be maintained. Please refer to the attached document for more details.

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