The Reserve Bank of India has issued, for public comments, the Draft Reserve Bank of India (Rural Co-operative Banks – Concentration Risk Management) Directions, 2026 and the Draft Reserve Bank of India (Rural Co-operative Banks – Credit Facilities) Amendment Directions, 2026, following the Statement on Developmental and Regulatory Policies dated 05 August 2026. The draft Directions propose replacing the 2025 Concentration Risk Management Directions and amending the 2025 Credit Facilities Directions. The proposals prescribe prudential exposure limits for single and group counterparties, unsecured advances and the real estate sector, while allowing larger Rural Co-operative Banks (RCBs) with deposits above ₹1,000 crore flexibility in determining housing loan tenor and moratorium periods. They also propose enhanced housing loan limits, withdrawal of prescribed prudential sectoral exposure limits except for the real estate sector, introduction of provisions relating to nominal members, revised housing loan norms, unsecured advance limits, and lending to nominal members. The draft Directions are proposed to come into effect from 01 April 2027, and comments from regulated entities, stakeholders and the public may be submitted by 28 August 2026 through the RBI website or by email.
Reserve Bank of India
Date : Aug 06, 2026
Review of Guidelines on Concentration Risk Management – Rural Co-operative Banks
In pursuance of the announcement made with regard to the captioned subject in the Statement on Developmental and Regulatory Policies dated August 5, 2026, the Reserve Bank of India has today issued the following draft Directions for public comments:
i. Draft Reserve Bank of India (Rural Co-operative Banks – Concentration Risk Management) – Directions, 2026 to replace Reserve Bank of India (Rural Co-operative Banks – Concentration Risk Management) –Directions, 2025
ii. Draft Reserve Bank of India (Rural Co-operative Banks – Credit Facilities) – Amendment Directions, 2026 to amend certain provisions of Reserve Bank of India (Rural Co-operative Banks – Credit Facilities) Directions, 2025
2. The above draft Directions prescribe,inter alia,prudential exposure limits for single/group counterparty, enhanced housing loan limits, and prudential exposure limits on unsecured advances. Additionally, it is proposed to allow flexibility to larger Rural Co-operative Banks (RCBs) with deposits above ₹1,000 crore in deciding the tenor and moratorium requirements for housing loans, while increasing the ceilings for these parameters in cases of other RCBs. Further, the prescribed prudential sectoral exposure limits, except for real estate sector, are proposed to be withdrawn.
3. The comments / feedback on the draft Directions may be submitted by the regulated entities and other stakeholders / members of public on or before August 28, 2026through the following channels:
i. The ‘Connect 2 Regulate’ section on the website by following the corresponding hyperlink provided against each document in the page where they are hosted; or
ii. by email with the subject line ‘Feedback on (full name of the draft Directions)’.
(Brij Raj)
Chief General Manager
Press Release: 2026-2027/828
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Draft Reserve Bank of India (Rural Co-operative Banks – Concentration Risk Management) Directions, 2026 – Draft for commentsIntroduction
RBI/2026-27/<>
DOR.CRE.REC.No.< >/07-03-006/2026-27 | dated: MM DD YYYY
Reserve Bank of India (Rural Co-operative Banks – Concentration Risk Management) Directions, 2026 – Draft for commentsIntroduction
The concentration of a bank’s exposures to its counterparties and different sectors of the economy poses significant risks to it and its depositors. Concentration of exposures of Rural Co-operative Banks (RCBs) are subject to prudential norms issued from time to time under Credit Monitoring Arrangements (CMA) and other regulatory instructions. It has been decided to review these norms in the backdrop of evolution in the activities of RCBs and the need to have broader alignment of their regulation with those of other regulated entities. The revised norms are contained in these Directions.
In exercise of the powers conferred by Sections 21 and 35A read with Section 56 of the Banking Regulation Act, 1949, and all other provisions / laws enabling the Reserve Bank of India (RBI) in this regard, RBI being satisfied that it is necessary and expedient in the public interest so to do, hereby, issues the Directions hereinafter specified.
Chapter I – Preliminary
1. Short Title and Commencement
(1) These Directions shall be called the Reserve Bank of India (Rural Co-operative Banks – Concentration Risk Management) Directions, 2026.
(2) These Directions shall come into effect on April 1, 2027.
2. Applicability
These Directions shall be applicable to Rural Co-operative Banks (hereinafter collectively referred to as ‘RCBs’ and individually as ‘RCB’).
In this context, rural co-operative banks shall mean State Co-operative Banks and Central Co-operative Banks, as defined in the National Bank for Agriculture and Rural Development Act, 1981.
3. Definitions
(1) In these Directions, unless the context states otherwise, the terms herein shall bear the meaning assigned to them in the ensuing paragraphs.
(i) “Central co-operative bank” and “State co-operative bank” shall have the same meanings assigned to them as in the National Bank for Agriculture and Rural Development Act, 1981 (61 of 1981).
(ii) Commercial Real Estate-Residential Housing (CRE-RH) loans for the purpose of these Directions shall mean loans to builders / developers for residential housing projects (except for captive consumption). Such projects should ordinarily not include non-residential commercial real estate. However, integrated housing projects comprising some commercial space (e.g. shopping complex, school, etc.) can also be classified under CRE-RH, provided that the commercial area in the residential housing project does not exceed 10 per cent of the total Floor Space Index (FSI) of the project. CRE-RH loans will also include loans to co-operative / group housing societies for their redevelopment.
(iii) “Credit Exposure” shall comprise of higher of sanctioned limit or outstanding amount of funded and non-funded credit facilities and underwriting and similar commitments. This shall also include any loan granted by an RCB out of the refinance assistance availed by it from its higher financing agencies (except where specifically excluded). Further, in case of fully drawn term loans, where there is no scope of re-drawal of any portion of the sanctioned limit, a RCB may reckon the outstanding for arriving at credit exposure limit. In respect of non-funded credit limit, 100 per cent of such limit or outstanding, whichever is higher, need be taken into account for the purpose.
(iv) “Exposure” for the purpose of these directions shall mean the sum of credit exposure and investment exposure.
(v) “Group of counterparties” shall mean counterparties belonging to a group as specified by the internal policies of an RCB.
Explanation: RCBs shall define a group of counterparties as per their Board-approved policy, taking into account the following principle:
Entities having one or more of the following attributes (non-exhaustive list) may be considered as part of a group:
(1) Common ownership and management
(2) One entity has effective control on the other
(3) The different partnership firms with one or more common partners engaged in the same line of business, viz., manufacturing, processing, trading activity, etc.
(4) Business of one entity is dependent on other
(5) Multiple persons / entities having loans guaranteed by the same person
(vi) “Investment Exposure” shall include non-SLR securities as prescribed under Chapter VII “Investments in non-SLR Securities” of the Reserve Bank of India (Rural Co-operative Banks – Classification, Valuation and Operation of Investment Portfolio) Directions, 2025.
(vii) Real Estate Sector Exposure for the purpose of these Directions shall comprise of (a) housing loans to individuals for Construction / purchase of houses / flats; (b) loans to individuals for repairs, alternations and additions to houses / flats; (c) CRE-RH loans; (d) Loans for housing schemes to eligible borrowers as per para 61 and 62 of the Reserve Bank of India (Rural Cooperative Banks – Credit Facilities) Directions, 2025; and (e) Investment exposure to real estate sector.
(viii) “Tier-I Capital” as on March 31 of the preceding financial year shall be reckoned for the purpose of fixing the exposure limits. “Tier-I capital” for the purpose will be the same as that prescribed under Chapter II of the Reserve Bank of India (Rural Co-operative Banks – Prudential Norms on Capital Adequacy) Directions, 2025.
(ix) “Unsecured Advances” shall mean loans and advances, or a portion thereof, not covered by the realisable value of a security (primary as well as collateral) to which the UCB has a valid recourse.
Explanation 1: The realisable value of security shall be estimated on a realistic basis.
Explanation 2: Clean overdrafts; loans against personal guarantee; clean bills purchased or discounted; cheques purchased; and drawals allowed against cheques sent for collection shall be treated as unsecured advances.
Explanation 3: Advances granted to salaried employees against their personal guarantee may be treated as secured advances, if the RCB has a legally enforceable agreement with the borrower and the employer of the borrower which ensures deduction of periodic loan instalments by the employer out of the employee’s salary / wages to meet the RCB’s claims.
Explanation 4: Advances against receivables shall be treated as secured advances provided that such receivables ab initio have a tenure of not more than 180 days.
(2) All other expressions unless defined herein shall have the same meaning as have been assigned to them under the Banking Regulation Act, 1949 or the Reserve Bank of India Act, 1934 or any statutory modification or re-enactment thereto or as used in commercial parlance, as the case may be.
Chapter II – Exposure Norms
4. Role of the Board
An RCB shall put in place a comprehensive Board-approved policy, which shall include inter-alia the aspects specified below. The specific aspects to be addressed in this policy are detailed in the relevant paragraphs of these Directions.
(1) Exposure limits to a single counterparty or group of counterparties within the prescribed prudential limits.
(2) Guidelines for determining a group of counterparties.
(3) Exposure limits for specific sectors along with specification of sectors.
5. Exposure limit to a single or group counterparty
(1) The sum of all exposures of an RCB to a single counterparty and a group of counterparties shall not be higher than 20 per cent and 25 per cent, respectively of its Tier-I capital.
Provided that exposure of an RCB to a single Primary Agricultural Credit Society (PACS) shall not exceed 30 per cent of its Tier-I capital, subject to relevant provisions of State Co-operative Society Act.
Provided further that an RCB may prescribe a lower limit within the above exposure limits in its Board approved policy.
(2) Following exposures shall be exempted from the limits specified in sub-paragraph (1):
(i) exposures towards food credit through food credit consortium
(ii) loans and advances granted against the security of an RCB’s own term deposits with sufficient margin availability
(3) Exposures which are in breach of the limits specified in sub-paragraph (1) above as on April 1, 2027 shall be subject to the following conditions:
(i) No fresh limits shall be sanctioned to such borrowers till the exposures are brought within the exposure ceilings specified in sub-paragraph (1).
(ii) Notwithstanding Sl. No. (i) above, outstanding term loans and non-fund-based facilities in respect of such borrowers may run-off till maturity as per the originally sanctioned terms and conditions / repayment schedule.
(iii) Limits on cash credit or revolving facilities of similar nature already sanctioned, may be allowed to be utilised. However, such limits may be rationalised with a view to meet the prescribed exposure limit in a time bound manner, which shall not in any case exceed three years from the date of applicability of these Directions, in consultation with the borrower.
6. Sectoral Exposure Limits
(1) An RCB shall identify and specify various sectors and sub-sectors to which it takes exposures or plans to take exposure as per its business model. Such sectors may be specified on the basis of segments of economy, homogenous borrower groups, homogenous economic activity or any other rational criteria.
(2) RCBs shall fix internal limits for their aggregate exposure to specific sectors and sub-sectors, if any, to contain the sectoral concentration concerns. These sectoral limits shall be fixed based on the RCB’s assessment of sectoral performance and associated risk perceptions.
(3) Exposure limits towards real estate sector shall be within the prudential limits prescribed in paragraph 7 of these Directions.
7. Aggregate limit for Exposure towards Real Estate Sector
(1) The aggregate exposure of an RCB to real estate sector shall not exceed 15 per cent of its total loans and advances.
Provided that aggregate exposure to real estate sector other than housing loans to individuals shall not exceed 5 per cent of the total loans and advances.
(2) Exemptions from Aggregate exposure limits:
(i) The above aggregate limits may be exceeded to the extent of funds obtained for the purpose from the higher financing agency and refinance from the National Housing Bank.
(ii) Housing loans extended by an RCB to its own staff, which are fully covered by superannuation benefits and mortgage of flat / house, may be excluded while calculating aggregate exposure to real estate sector.
(3) For the purpose of sub-paragraph (1), the total loans and advances shall be reckoned based on the audited balance sheet as on March 31 of the preceding financial year.
(4) An RCB, in view of its primary role of lending for activities related to agriculture and rural development, shall desist from extending any real estate exposures apart from those specifically permitted in these Directions.
(5) The treatment of exposures to real estate sector as on April 1, 2027 which are in breach of the requirements of paragraph 7 (1) shall be as per sub-paragraph (3) of paragraph 5.
8. Aggregate limit on unsecured advances
The aggregate unsecured advances granted by an RCB shall not exceed 15 per cent of its total loans and advances. The total loans and advances shall be reckoned based on the audited balance sheet as on March 31 of the preceding financial year. The treatment of unsecured advances as on April 1, 2027 which are in breach of the requirements of this paragraph shall be as per sub-paragraph (3) of paragraph 5.
9. Inter – bank deposit
The deposits maintained by an RCB with any single bank shall not exceed 25 per cent of its Tier-I capital.
Provided that the deposits maintained by a Central co-operative bank with the State co-operative bank of the state concerned shall be exempted from above limits.
Chapter III – Repeal and other provisions
10. Repeal and saving
(1) With the commencement of these Directions, the Reserve Bank of India (Rural Co-operative Banks – Concentration Risk Management) Directions, 2025 stand repealed.
(2) Notwithstanding such repeal, any action taken or purported to have been taken, or initiated under the repealed Directions shall continue to be governed by the provisions thereof. All approvals or acknowledgments granted under these repealed lists shall be deemed as governed by these Directions. Further, the repeal of these directions, instructions, or guidelines shall not in any way prejudicially affect:
(i) any right, obligation or liability acquired, accrued, or incurred thereunder;
(ii) any, penalty, forfeiture, or punishment incurred in respect of any contravention committed thereunder;
(iii) any investigation, legal proceeding, or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture, or punishment as aforesaid; and any such investigation, legal proceedings or remedy may be instituted, continued, or enforced and any such penalty, forfeiture or punishment may be imposed as if those directions, instructions, or guidelines had not been repealed.
11. Application of other laws not barred
The provisions of these Directions shall be in addition to, and not in derogation of the provisions of any other laws, rules, regulations or directions, for the time being in force.
12. Interpretations
For the purpose of giving effect to the provisions of these Directions or in order to remove any difficulties in the application or interpretation of the provisions of these Directions, the RBI may, if it considers necessary, issue necessary clarifications in respect of any matter covered herein and the interpretation of any provision of these Directions given by the RBI shall be final and binding.
(Dr. Sudarsana Sahoo)
Chief General Manager
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Drat Reserve Bank of India (Rural Co-operative Banks – Credit Facilities) – Amendment Directions, 2026 – Draft for comments
Reserve Bank of India (Rural Co-operative Banks – Credit Facilities) – Amendment Directions, 2026 – Draft for comments
RBI/2026-27/< >
DOR.CRE.REC.< >/07-01-006/2026-27 MM DD YYYY
Please refer to Reserve Bank of India (Rural Co-operative Banks – Credit Facilities) Directions, 2025 (hereinafter referred to as ‘the Directions’).
2. On a review and in exercise of the powers conferred by the Sections 21 and 35A read with Section 56 of the Banking Regulation Act, 1949; and all other enabling provisions / laws in this regard, the Reserve Bank of India being satisfied that it is necessary and expedient in the public interest so to do, hereby issues the Amendment Directions hereinafter specified.
3. The Amendment Directions modifies the Directions as under:
3(1) In Paragraph 4(1) of Chapter I – Preliminary of the Directions, a new definition shall be inserted as Sl. No. (xva) as below:
(xva) “Nominal member” shall include any person who is a co-parcener or who desires to stand surety for a borrowing member of the bank or who desires to avail of the permitted credit facilities occasionally for a temporary period not exceeding three years. Such a person may be enrolled as a nominal member upon his application and on payment of prescribed non-refundable entrance fee, provided that such a person resides or is gainfully engaged in any occupation within the area of operation of the bank. The nominal member shall not be entitled to receive a share certificate, audited accounts, annual report and dividend from the RCB. The nominal member shall also not be entitled to attend, participate and vote in the General Meeting and/or Special General Meeting of the Bank.
3(2). In ‘Chapter VI – Housing Loan’ of the Directions, the following modifications shall be effected:-
(i) Section D “Period of Loan” shall be replaced as under:
D. Tenor of and moratorium on Housing Loan
(ii) Paragraph 64 shall be substituted with the following paragraph:
64. (1) The tenor of housing loans extended by an RCB with deposits upto ₹1000 crore, shall not exceed 20 years, including any moratorium period. Moratorium period in housing loans for these RCBs may be permitted upto the date of completion of construction, subject to a maximum of 24 months from the date of first disbursement of the loan.
(2) Other RCBs having deposits above ₹1,000 crore, are permitted to determine the tenor of housing loans, including moratorium periods, as per their Board-approved policies.
(3) Moratorium may be allowed only in cases of housing loans extended for under construction houses. Consequently, moratorium shall not be allowed in loans for acquisition of completed houses.
(4) The credit policy of a RCB should, at a minimum, specify risk management and pricing strategies for housing loans considering inter alia the life expectancy of the borrower and the relatively longer duration of these exposures.
(5) The instalments should be fixed on a realistic basis taking into account the repaying capacity of the borrower.
(iii) Section E. “Graduated Instalments” and paragraph 65 shall be deleted.
(iv) Paragraph 67 shall be substituted with the following paragraph:
67. RCBs may also extend need-based credit to owner of houses / flats for repairs, additions, alterations, etc., whether it is owner occupied or tenant occupied after obtaining such security as the bank may deem appropriate. They should satisfy themselves regarding the estimated cost of repairs, additions, etc. having regard to the extent of such repairs or additions, materials to be used, cost of labour and other charges and after obtaining certificate/s from qualified engineers / architects in respect thereof. Such loans may be sanctioned up to 10 per cent of the limits permitted for housing loans as specified in paragraph 73, within the applicable housing loan limit.
(v) In paragraph 71 the words “Act and the rules framed thereunder.” shall be deleted.
(vi) Paragraph 73 shall be substituted with the following paragraph:
73. Housing loans sanctioned by RCBs to a single borrower (including staff loans), within the aggregate exposure to real estate sector as prescribed in Reserve Bank of India (Rural Co-operative Banks – Concentration Risk Management) Directions, 2026, shall be subject to the following ceilings:
| Deposit Size of the RCB (₹ in crore) |
Limits for housing loan to a single borrower (per dwelling unit) including repairs, additions, and alterations* |
| >₹10,000 | ₹3 crore |
| > ₹1,000 – ₹10,000 | ₹2 crore |
| > ₹100 – ₹1,000 | ₹1.4 crore |
| ≤₹100 | ₹60 lakh |
| *A ceiling of 10% of these limits shall apply on loans for repairs/additions/alterations, within the above limits. Accordingly, housing loan limit or repairs limit, as the case may be, will get automatically adjusted by that amount. | |
3(3). In ‘Chapter VIII – Other Instructions on Credit Facilities’ of the Directions, the following modifications shall be effected:-
(i) Section E “Prior authorisation from NABARD”, paragraph 118 and Annex III shall be deleted.
(ii) New Sections I and J shall be inserted as under:
I. Exposure limits on unsecured advances
121A. The limits on unsecured advances to a single borrower, within the aggregate ceiling of unsecured advances as prescribed in Reserve Bank of India (Rural Co-operative Banks – Concentration Risk Management) Directions, 2026, shall be as under:
| Deposit size of the RCB (₹ in crore) |
Limits on unsecured advances to a single borrower |
| >₹1,000 | ₹10 lakh |
| >₹100 – ₹1,000 | ₹7.5 lakh |
| ≤₹100 | ₹5 lakh |
J. Lending to nominal members
121B. An RCB may sanction loans to its nominal members only if it has an enabling provision in its by-laws (in conformity with the applicable Co-operative Societies Act) for extending credit facility to nominal members. Subject to the above, an RCB may grant loans to its nominal members against deposits, gold and silver ornaments, life insurance policies, and government securities, within the monetary ceiling as per its Board approved policy.
4. The above amendments shall come into force from April 1, 2027.
(Dr. Sudarsana Sahoo)
Chief General Manager
