RBI wants urban cooperative banks to focus mainly on priority sector

Reserve Bank of India (RBI) on Mondaproposed that the single and group borrower limits of urban cooperative banks (UCBs) should be brought down and half the loans given should not be of more than Rs 25 lakh, while the priority sector lending targets should be raised steeply.

UCBs’ target for priority-sector lending has been proposed at 75 per cent of their credit from 40 per cent now. The target has to be reached in phases — 50 per cent by March 2021, 60 per cent by March 2022, and 75 per cent by March 2023.

The RBI proposed that the single and group borrower limits should be 10 per cent and 25 per cent, respectively, of a bank’s tier-1 capital.

At present, UCBs are allowed to have exposures of up to 15 per cent and 40 per cent of their capital funds to a single borrower and a group of borrowers, respectively.