Rural co-operative bank credit limits updated in new draft rules
The Reserve Bank of India has issued draft directions revising concentration risk management and credit facility guidelines for Rural Co-operative Banks. Stakeholders are invited to submit comments by August 28, 2026.
Flexibility for larger co-operative lenders
The proposed draft directions introduce revised prudential exposure limits for single and group counterparties, alongside enhanced housing loan limits and updated exposure caps on unsecured advances.
Under the new framework, larger Rural Co-operative Banks with a deposit base exceeding ₹1,000 crore will gain flexibility to determine the tenor and moratorium requirements for housing loans independently.
For all other Rural Co-operative Banks, the prescribed ceilings for housing loan tenors and moratoriums will be increased.
In addition, the central bank proposes to withdraw sectoral exposure limits across most categories, with the single exception of the real estate sector.
Replacing the 2025 framework
The draft directions follow the announcement made in the Statement on Developmental and Regulatory Policies published on August 5, 2026.
Once finalized, the new framework will replace the 2025 guidelines on concentration risk management and amend existing credit facility rules for rural co-operative banks.
Regulated entities, industry stakeholders, and members of the public have until August 28, 2026, to submit feedback through the dedicated Connect 2 Regulate portal or via email.
Operational freedom with a real estate caveat
Granting larger co-operative banks autonomy over loan tenors is a sensible move for sector maturity.
Yet, keeping strict caps on real estate highlights lingering worries over property concentration risks.
For smaller lenders, these incremental ceiling tweaks provide only marginal operational relief.