(LiveMint)
The Reserve Bank of India (RBI) on Monday restricted urban cooperative banks (UCBs) from offering large corporate loans through several changes to lending norms, after depositors lost large sums of money following the crisis at Punjab and Maharashtra Cooperative (PMC) Bank. The regulator slashed single and connected borrower exposure for UCBs, hiked the priority sector lending (PSL) target and specified a portfolio mix for at least half of their loan books. The guidelines will be applicable from 31 March 2023.
The prudential exposure limits for UCBs for a single borrower and a group of connected borrowers were lowered to 10% and 25%, respectively, of their tier-I capital. These limits were earlier at 15% and 40%, respectively.These are part of RBI’s draft circular on limits on exposure to single and group borrowers, large exposures and revision in PSL targets for primary UCBs. RBI said it would provide an appropriate glide path to UCBs for compliance with the norms.
