**Policy Summary: Relaxation of Unsecured Exposure Norms for Urban Cooperative Banks (UCBs)**
This policy, reference RBI201516380, dated April 21, 2016, issued by the Reserve Bank of India (RBI), provides a relaxation of unsecured exposure norms for Urban Cooperative Banks (UCBs). It modifies previous circulars UBD.BPD. PCB Cir No.4513.05.000201213 dated April 03, 2013 and UBD. CO. BPD. PCB Cir. No.2913.05.000201314 dated October 10, 2013.
The policy permits UCBs engaged in financial inclusion to grant unsecured advances beyond the existing ceiling of 10% of total assets, subject to specific conditions.
**Key Provisions:**
* UCBs with a priority sector loan portfolio of at least 90% of gross loans may grant unsecured advances up to 35% of their total assets, as per the audited balance sheet at the end of the preceding financial year.
* The unsecured loan portfolio exceeding the standard 10% must comprise priority sector loans.
* Exposure to individual borrowers within this enhanced limit is capped at ₹40,000.
* UCBs whose priority sector lending portfolio is less than 90% will continue to be governed by the instructions outlined in circular UBD CO BPD PCB Cir. No.2913.05.000201314 dated October 10, 2013.
**Eligibility Criteria:**
To qualify for the dispensation under either provision, UCBs must meet the following criteria based on their latest Inspection Report and audited financial statements:
* Capital to Risk-Weighted Assets Ratio (CRAR) of not less than 9%.
* Gross Non-Performing Assets (NPAs) of not more than 7%.
Eligible banks can apply to the Regional Office of the RBI under whose jurisdiction its head office is situated.
**Contact Information:**
Department of Cooperative Bank Regulation, Central Office, C-7, Bandra Kurla Complex, 1st and 2nd Floor, Bandra East, Mumbai – 400051, India.
Phone: 022-26578100/8300/8500/8700; Email: cgmdcbrcorbi.org.in.
The circular is signed by Suma Varma, Principal Chief General Manager.
Key Entities Referenced
Reserve Bank of India (RBI): The central bank of India, the issuing authority of the circular.
Primary Urban Cooperative Banks (UCBs): The addressees of the circular, a type of banking institution in India.
Unsecured Exposure Norms: The regulatory guidelines regarding unsecured loans and advances for UCBs.
UBD.BPD. PCB Cir No.45/3.05.000/2012-13: Reference to a previous circular issued by the RBI regarding unsecured loans and advances, dated April 03, 2013.
UBD. CO. BPD. PCB Cir. No.29/13.05.000/2013-14: Reference to a previous circular issued by the RBI regarding unsecured loans and advances, dated October 10, 2013.
Priority Sector Lending: A category of lending that the Indian government mandates banks to allocate a certain portion of their funds towards, for sectors like agriculture, small businesses, etc.
Gross Non-Performing Assets (Gross NPAs): A measure of the percentage of a bank's loans that are not generating income.
Capital to Risk (Weighted) Assets Ratio (CRAR): A measure of a bank's capital adequacy, indicating its ability to absorb losses.
RBI/2015-16/380 Vaishakha 01, 1938
DCBR.CO.BPD. (PCB). No.15/13.05.000/2015-16 April 21, 2016
The Chief Executive Officers
All Primary (Urban) Co-operative Banks
Dear Sir/Madam,
Unsecured Exposure Norms for UCBs – Relaxation
Please refer to our circulars UBD.BPD. (PCB) Cir No.45/13.05.000/2012-13 dated
April 03, 2013 and UBD. CO. BPD. (PCB) Cir. No.29/13.05.000/2013-14 dated
October 10, 2013 on the captioned subject permitting UCBs fulfilling certain
conditions to grant unsecured loans and advances beyond the extant ceiling of 10%
of total assets as per audited balance sheet as on March 31 of the previous financial
year.
2. In order to provide further impetus to Urban Cooperative Banks (UCBs) engaged
in financial inclusion the instructions have been reviewed and it has been decided
as under:
(i) UCBs whose priority sector loan portfolio is not less than 90% of the gross loans
may be allowed to grant unsecured advances to the extent of 35 % of their total
assets as per the audited balance sheet at the end of the preceding financial year,
subject to the following conditions:
(a) The entire unsecured loan portfolio in excess of the normally permitted
10%, shall comprise of priority sector loans and the exposure to any
individual borrower shall not exceed ` 40,000/-.
(b) The bank complies with the eligibility criteria prescribed in para 3.
सहकार� बक� �व�नयमन �वभाग,क�द्र�य कायार्लय, सी-7 बांद्रा कुलार् कॉम्प्लेक्स ,पहल� और दसू र� मंिज़ल, बांद्रा (पूव)र्,
मुंबई- 400051 भारत .फोन: 022 –26578100/8300/8500/8700; ई मेल: cgmdcbrco@rbi.org.in
Department of Co-operative Bank Regulation, Central Office, C-7 Bandra Kurla Complex, 1st and 2nd Floor,
Bandra (East), Mumbai - 400051, India. Phone: 022 –26578100/8300/8500/8700; Email: cgmdcbrco@rbi.org.in
बक� �हन्द� म� पत्राचार का स्वागत करता है —
चेतावनी: भारतीय �रज़व र् बक� द्वारा ई-मेल, डाक, एसएमएस या फोन कॉल के ज�रये कोई भी व्यिक्तगत जानकार� जैसे बक� खात े का ब्यौरा, पासवड र्
आ�द नह�ं माँगा जाता है। यह धन रखने या देने का प्रस्ताव भी नह�ं करता है। ऐसे प्रस्ताव� का �कसी भी प्रकार से जवाब मत द�िजए।
Caution: RBI never sends mails, SMSs or makes calls asking for personal information like bank account details, passwords, etc. It never
keeps or offers funds to anyone. Please do not respond in any manner to such offers.(ii) The dispensation for banks whose priority sector lending portfolio is less than
90 % will continue to be the same as mentioned in our circular UBD CO BPD (PCB)
Cir. No.29/13.05.000/2013-14 dated October 10, 2013.
3. For being eligible for the dispensation either under para 2(i) or 2 (ii), the UCB
should have met the following criteria as per the latest Inspection Report and
audited financial statements:
(i) CRAR of not less than 9%
(ii) Gross NPAs of not more than 7%
Eligible banks may apply to the Regional Office of the RBI under whose jurisdiction
its head office is situated.
Yours faithfully
(Suma Varma)
Principal Chief General Manager
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