**Executive Summary**
This document from the Reserve Bank of India (RBI) outlines amendments to the Directions regarding credit facilities for Urban Co-operative Banks (UCBs), specifically concerning housing finance and unsecured advances. These amendments, detailed in the "Amendment Directions, 2026 - Draft for Comments", modify Chapters VIII and XIII of the existing Directions. The amendments will come into effect from October 1, 2026, or earlier if adopted by a UCB in its entirety.
**Key Points / Main Content**
* **Housing Finance (Chapter VIII)**
* **Tenor of Housing Loans:**
* For Tier 1 and Tier 2 UCBs, the tenor of housing loans shall not exceed 20 years, including any moratorium period.
* Tier 3 and Tier 4 UCBs may determine the tenor of housing loans, including moratorium periods, as per their Board-approved policies.
* UCB credit policies should specify risk management and pricing strategies for housing loans, considering the borrower's life expectancy and the duration of the exposure.
* **Moratorium Period in Housing Loans:**
* Moratoriums are only allowed for housing loans for the construction of houses. They are not allowed for the acquisition of completed houses.
* For Tier 1 and Tier 2 UCBs, moratorium periods shall not exceed eighteen months from the date of the first loan disbursement or the completion/occupancy certificate date, whichever is later.
* Tier 3 and Tier 4 UCBs may determine moratorium periods within the overall loan tenor, based on Board-approved policies.
* Paragraph 119 is deleted.
* **Unsecured Advances (Chapter XIII)**
* **Limits for Individual Unsecured Advances:**
* Tier 1 UCBs: ₹5 lakh
* Tier 2 UCBs: ₹7.5 lakh
* Tier 3 and Tier 4 UCBs: ₹10 lakh
* **Effective Date:**
* The amendments will come into force on October 1, 2026, or earlier if adopted by a UCB in its entirety. Adoption includes amendments contained in these directions as well as those contained in the RBI Directions related to concentration risk management, 2026.
**Impact Analysis**
**Stakeholder: Urban Co-operative Banks (UCBs)**
* **Impact:** UCBs need to adhere to the revised regulations concerning the tenor and moratorium periods of housing loans and limits on individual unsecured advances. This potentially affects their credit policies, risk management strategies, and lending practices.
* **Action Required:** UCBs must review and update their internal policies and procedures to align with the amended directions, potentially including changes to Board-approved policies. They must also ensure that the necessary changes are adopted fully and are in compliance.
Key Entities Referenced
Reserve Bank of India: India's central bank and regulatory body responsible for monetary policy and banking supervision.
Banking Regulation Act, 1949: Indian legislation that regulates banking companies.
Reserve Bank of India (Urban Co-operative Banks – Credit Facilities) – Amendment Directions, 2026: Document outlining amendments to directions concerning credit facilities for Urban Co-operative Banks, issued by the Reserve Bank of India.
Urban Co-operative Banks: Financial institutions operating primarily in urban and semi-urban areas.
Reserve Bank of India (Urban Co-operative Banks – Concentration Risk Management) Directions, 2025: Directions pertaining to concentration risk management for Urban Co-operative Banks.
भारतीय �रज़वर् बैंक
RESERVE BANK OF INDIA
RBI/2025-26/<>
DOR.CRE.REC.<>/07-01-005/2025-26 MM DD YYYY
Reserve Bank of India (Urban Co-operative Banks – Credit Facilities) –
Amendment Directions, 2026 – Draft for Comments
Please refer to Reserve Bank of India (Urban Co-operative Banks – Credit Facilities)
Directions, 2025 (hereinafter referred to as ‘the Directions’).
2. On a review, 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 provisions / laws
enabling the Reserve Bank of India 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:
(1). In ‘Chapter VIII – Housing Finance’ of the Directions, the following modifications
shall be effected:-
(i) Paragraph 116 shall be substituted with the following paragraph:
116. Tenor of housing loans:
(1) For Tier 1 and Tier 2 UCBs, the tenor of housing loans shall not exceed 20
years, including moratorium period.
(2) Tier 3 and Tier 4 UCBs are permitted to determine the tenor of housing loans,
including moratorium period, as per their Board-approved policies.
(3) The credit policy of a UCB 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.
(ii) Paragraph 117, shall be substituted with the following paragraph:Reserve Bank of India (Urban Co-operative Banks – Credit Facilities) –
Amendment Directions, 2026 – Draft for Comments
117. Moratorium period in housing loans:
(1) Moratorium may be allowed only in cases of housing loans extended for the
purpose of construction of houses. Consequently, moratorium shall not be
allowed in loans for acquisition of completed houses.
(2) For Tier 1 and Tier 2 UCBs, moratorium periods, if any, in housing loans shall
be a maximum of eighteen months from the date of first disbursement of the loan
or the date of obtaining the completion / occupancy certificate, whichever is later.
(3) Tier 3 and Tier 4 UCBs may determine the moratorium periods in housing
loans, within the overall loan tenor, in accordance with their Board approved
policies.
(iii) Paragraph 119 shall be deleted.
(2). In ‘Chapter XIII – Miscellaneous Provisions’ of the Directions, Paragraph 203, shall
be substituted with the following paragraph:
203. The limits for individual unsecured advances, within the aggregate ceiling
of unsecured advances as mentioned in Reserve Bank of India (Urban Co-
operative Banks – Concentration Risk Management) Directions, 2025, shall be
as under:
Category of UCB Limit for individual unsecured advance
Tier 1 ₹5 lakh
Tier 2 ₹7.5 lakh
Tier 3 & 4 ₹10 lakh
4. The above amendments shall come into force from October 1, 2026, or an earlier
date when adopted by a UCB in entirety. It is clarified that adoption by a UCB in entirety
shall entail adoption of amendments contained in these Amendment Directions as well
as those contained in the Reserve Bank of India (Urban Co-operative Banks –
Concentration Risk Management) – Amendment Directions, 2026.
Vaibhav Chaturvedi
(Chief General Manager)
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