RBI/2026-27/< >
DOR.CRE.REC.< >/07-01-006/2026-27

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Reserve Bank of India (Rural Co-operative Banks – Credit Facilities) – Amendment Directions, 2026 - Draft for comments

Please refer to Reserve Bank of India (Rural Co-operative Banks – Credit Facilities) Directions, 2025 (hereinafter referred to as ‘the Directions’).

2. On a review and in exercise of the powers conferred by the Sections 21 and 35A read with Section 56 of the Banking Regulation Act, 1949; and all other enabling provisions / laws in this regard, the Reserve Bank of India being satisfied that it is necessary and expedient in the public interest so to do, hereby issues the Amendment Directions hereinafter specified.

3. The Amendment Directions modifies the Directions as under:

3(1) In Paragraph 4(1) of Chapter I – Preliminary of the Directions, a new definition shall be inserted as Sl. No. (xva) as below:

(xva) “Nominal member” shall include any person who is a co-parcener or who desires to stand surety for a borrowing member of the bank or who desires to avail of the permitted credit facilities occasionally for a temporary period not exceeding three years. Such a person may be enrolled as a nominal member upon his application and on payment of prescribed non-refundable entrance fee, provided that such a person resides or is gainfully engaged in any occupation within the area of operation of the bank. The nominal member shall not be entitled to receive a share certificate, audited accounts, annual report and dividend from the RCB. The nominal member shall also not be entitled to attend, participate and vote in the General Meeting and/or Special General Meeting of the Bank.

3(2). In ‘Chapter VI – Housing Loan’ of the Directions, the following modifications shall be effected:-

(i) Section D “Period of Loan” shall be replaced as under:

D. Tenor of and moratorium on Housing Loan

(ii) Paragraph 64 shall be substituted with the following paragraph:

64. (1) The tenor of housing loans extended by an RCB with deposits upto ₹1000 crore, shall not exceed 20 years, including any moratorium period. Moratorium period in housing loans for these RCBs may be permitted upto the date of completion of construction, subject to a maximum of 24 months from the date of first disbursement of the loan.

(2) Other RCBs having deposits above ₹1,000 crore, are permitted to determine the tenor of housing loans, including moratorium periods, as per their Board-approved policies.

(3) Moratorium may be allowed only in cases of housing loans extended for under construction houses. Consequently, moratorium shall not be allowed in loans for acquisition of completed houses.

(4) The credit policy of a RCB should, at a minimum, specify risk management and pricing strategies for housing loans considering inter alia the life expectancy of the borrower and the relatively longer duration of these exposures.

(5) The instalments should be fixed on a realistic basis taking into account the repaying capacity of the borrower.

(iii) Section E. “Graduated Instalments” and paragraph 65 shall be deleted.

(iv) Paragraph 67 shall be substituted with the following paragraph:

67. RCBs may also extend need-based credit to owner of houses / flats for repairs, additions, alterations, etc., whether it is owner occupied or tenant occupied after obtaining such security as the bank may deem appropriate. They should satisfy themselves regarding the estimated cost of repairs, additions, etc. having regard to the extent of such repairs or additions, materials to be used, cost of labour and other charges and after obtaining certificate/s from qualified engineers / architects in respect thereof. Such loans may be sanctioned up to 10 per cent of the limits permitted for housing loans as specified in paragraph 73, within the applicable housing loan limit.

(v) In paragraph 71 the words “Act and the rules framed thereunder.” shall be deleted.

(vi) Paragraph 73 shall be substituted with the following paragraph:

73. Housing loans sanctioned by RCBs to a single borrower (including staff loans), within the aggregate exposure to real estate sector as prescribed in Reserve Bank of India (Rural Co-operative Banks – Concentration Risk Management) Directions, 2026, shall be subject to the following ceilings:

3(3). In ‘Chapter VIII - Other Instructions on Credit Facilities’ of the Directions, the following modifications shall be effected:-

(i) Section E “Prior authorisation from NABARD”, paragraph 118 and Annex III shall be deleted.

(ii) New Sections I and J shall be inserted as under:

I. Exposure limits on unsecured advances

121A. The limits on unsecured advances to a single borrower, within the aggregate ceiling of unsecured advances as prescribed in Reserve Bank of India (Rural Co-operative Banks – Concentration Risk Management) Directions, 2026, shall be as under:

J. Lending to nominal members

121B. An RCB may sanction loans to its nominal members only if it has an enabling provision in its by-laws (in conformity with the applicable Co-operative Societies Act) for extending credit facility to nominal members. Subject to the above, an RCB may grant loans to its nominal members against deposits, gold and silver ornaments, life insurance policies, and government securities, within the monetary ceiling as per its Board approved policy.

4. The above amendments shall come into force from April 1, 2027.

(Dr. Sudarsana Sahoo)
Chief General Manager