RBI's big plan, urban cooperative banks will now be able to give more loans without guarantee; What are the rules and who will benefit?
New Delhi Taking loan from urban cooperative banks can now be easy. The Reserve Bank of India (RBI) has issued new draft rules, in which it is proposed to give these banks more freedom to give more loans without guarantee. If these rules are implemented, common customers, especially small businessmen and the middle class, can get direct benefits.
The biggest change is that there is a proposal to increase the limit of unsecured loans from 10% to 20% of the total assets of banks. This means that now urban cooperative banks will be able to give twice as many loans without guarantee as before. However, RBI has clarified that additional unsecured loan above 20% can be given only to priority sectors (like small farmers, micro enterprises) and that too up to a limit of ₹50,000 per borrower.
The draft also talks about increasing the personal loan limit and making the definition of unsecured loan more clear. This means the process can be easier for those seeking small ticket loans.
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There is also a proposal to increase the loan limit for purchasing consumer durables like fridge, washing machine, TV. This can be up to ₹2.5 lakh per borrower. This can provide relief to middle income families.
There are also preparations to relax some rules related to home loan tenure and moratorium for third and fourth tier urban cooperative banks. This can make housing loan products more flexible.
RBI has sought suggestions on this draft by March 4, 2026. Besides, a capacity building mission will also be started to improve the functioning of cooperative banks, under which a large number of employees will be trained.
That is, the objective is clear to strengthen urban cooperative banks and increase access to credit to small customers.
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