The Reserve Bank of India (RBI) raised the small value loan ceiling for Urban Cooperative Banks (UCBs) to ₹30 million per borrower and increased their aggregate exposure to housing, real estate, and commercial real estate loans to 25% of total loans.
RBI redefined small value loans as those not exceeding ₹2.5 million or 0.4% of tier 1 capital (whichever is higher), up to ₹30 million. Previously, UCBs had to achieve 50% of aggregate loans as small value loans (not exceeding ₹25 lakh or 0.2% of tier 1 capital, up to ₹10 million per borrower) by March 31, 2026.
The RBI maintained timelines and targets. UCB boards should review loan portfolio behavior and potentially set lower ceilings. The guidelines are effective immediately.
The RBI also capped residential mortgage exposure (excluding priority sector loans) at 25% of total loans and real estate exposure (excluding housing loans) at 5%. Individual housing loan limits are ₹6 million (tier 1), ₹14 million (tier 2), ₹20 million (tier 3), and ₹30 million (tier4).
The RBI extended the provisioning glide-path for security receipts investments by 2 years to FY2027-28, but existing provisions will be maintained.
