Exposure Limits for Urban Cooperative Banks revised by RBI

On March 13, 2020, the Reserve Bank of India revised exposure limits of Urban Cooperative Banks. Earlier the RBI permitted 15% of its capital funds to single borrowers and 40% of its funds to group of borrowers. It has now revised the group of borrower fund limit to 25% of its funds.

Highlights

Apart from Exposure limit, the central bank also increased the Priority Sector lending to 75%. These changes were introduced by the Reserve Bank of India through a notification.

Exposure Limit

The Exposure Limit is the maximum credit a bank avails to its borrower. In simple terms, higher the exposure limit, higher are the loans available to its customers.

Priority Sector Lending

It is an important role provided by the RBI to banks. The priority sectors include agriculture, micro and small enterprises, low income groups, poor people for housing, education loans, loans for weaker sections.

  • Agriculture and allied activities include farmers and self-help groups
  • The loan to small scale industries are also Priority Sector Lending. Direct Finances under this category include processing, preservation of goods, manufacturing. Indirect Finances in the category include cottage industries, artisans, cooperatives of producers and artisans.

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