Pursuant to the announcements made in the Statement on Developmental and Regulatory Policies dated February 6, 2026, the Reserve Bank of India has released draft Amendment Directions for public consultation, proposing changes to the existing regulatory framework for Urban Co-operative Banks (UCBs).

The draft directions issued by the Department of Regulation include:

RBI (Urban Co-operative Banks – Concentration Risk Management) Amendment Directions, 2026

RBI (Urban Co-operative Banks – Credit Facilities) Amendment Directions, 2026

RBI (Urban Co-operative Banks – Financial Statements: Presentation and Disclosures) Second Amendment Directions, 2026

The proposed amendments seek to rationalise the definition of unsecured advances, enhance individual loan limits for such advances, and increase the aggregate ceiling on unsecured lending by UCBs to 20% of total advances, from the existing limit of 10% of total assets.

Additionally, the RBI has proposed to raise the lending limit to nominal members for purchase of consumer durables to Rs 2.5 lakh per borrower. The draft also suggests deregulation of tenor and moratorium requirements for housing loans extended by Tier 3 and Tier 4 UCBs, along with the introduction of additional disclosure requirements.

Stakeholders, regulated entities, and members of the public may submit their comments and feedback on or before March 4, 2026, either through the ‘Connect 2 Regulate’ section on the RBI website or via email, as specified, with the subject line ‘Feedback on (full name of the draft Amendment Directions)’.