The RBI has issued comprehensive directions governing how UCBs can undertake financial services beyond core banking. The framework tightens governance, eligibility, and risk controls across activities.
The Directions overhaul classification, valuation, and governance of UCB investments. The key takeaway is tighter Board oversight, clearer MTM norms, and uniform risk controls.
RBI’s Local Area Banks KYC Directions, 2025 set out a comprehensive AML/CFT framework covering customer acceptance, risk-based KYC, digital and video-based identification, beneficial ownership, and ongoing transaction monitoring to prevent money laundering and terrorist financing while ensuring financial inclusion.
RBI’s 2025 Directions set out rules for classification, valuation, and operation of investment portfolios in Local Area Banks, emphasizing compliance with statutory requirements.
RBI released updated CRR and SLR Directions for Local Area Banks, outlining new reserve ratios, eligible assets, and reporting requirements. The framework aims to strengthen liquidity discipline and ensure monetary stability.
The RBI has issued comprehensive directions governing digital banking channels for UCBs. The rules clarify eligibility, approval requirements, and customer protection norms, effective from January 1, 2026.
RBI mandates ALM guidelines for small finance banks, strengthening risk management and ensuring prudent liquidity and interest rate practices.
The Directions lay down minimum pricing norms for fixed-rate loans and detailed rules for floating and hybrid loans. The decision balances bank flexibility with safeguards against under-pricing and unfair charges.
The new Directions impose board-level accountability, curb director-linked lending, and strengthen monitoring to reduce NPAs. UCBs must realign policies immediately to comply.
The RBI lays down a self-contained framework governing loan transfers by Local Area Banks. The rules strictly limit activities to stressed loans and ensure real transfer of risk without credit enhancement.
