RBI Extends Deadline for Small Value Loans in UCBs

On July 25, 2024, the Reserve Bank of India announced an extension for Urban Co-operative Banks (UCBs) to meet their small value loan targets. Initially set for March 31, 2024, the new deadlines are March 31, 2025, and March 31, 2026. UCBs are required to ensure that at least 50% of their aggregate loans and advances are small value loans—defined as loans up to ₹25 lakh or 0.2% of Tier I capital, with a maximum of ₹1 crore per borrower. Due to challenges faced by UCBs in meeting these requirements, the RBI has adjusted the minimum percentage of small value loans to 40% by March 31, 2025, and 50% by March 31, 2026. All other prudential limits outlined in the March 13, 2020 circular remain unchanged. This extension aims to provide UCBs with additional time to comply with the revised standards.

Reserve Bank of India

RBI/2024-25/53
DOR.CRE.REC.28/07.10.002/2024-25

July 25, 2024

All Primary (Urban) Co-operative Banks

Madam / Dear Sir,

Small Value Loans – Primary (Urban) Co-operative Banks (UCBs)

Please refer to paras 2.2 and 2.2.1 of the circular DOR (PCB).BPD.Cir No.10/13.05.000/2019-20 dated March 13, 2020, in terms of which, UCBs were required, inter alia, to have at least 50 per cent of their aggregate loans and advances comprising of Small Value Loans, i.e., loans of value not more than ₹25 lakh or 0.2 per cent of their Tier I capital, whichever is higher, subject to a maximum of ₹1 crore, per borrower. The target date for complying with the above requirement was March 31, 2024.

2. Taking into account the representations received by the Bank citing certain difficulties being faced by the UCBs in this regard, it has been decided to extend the glide path to achieve the aforementioned target by two years as given below:

3. All other provisions with regard to prudential limits prescribed in the circular dated March 13, 2020referred to above remain unchanged.

Yours faithfully,

(Vaibhav Chaturvedi)
Chief General Manager