Review of Guidelines on Concentration Risk Management - Rural Co-operative Banks; ‘On Tap’ Basis License For UCBs Resumed
FinTech BizNews Service
Mumbai, 5 August 2026: The Monetary Policy Committee (MPC) held its 62nd meeting from August 3 to 5, 2026, under the chairmanship of Shri Sanjay Malhotra, Governor, Reserve Bank of India. The MPC members Dr. Nagesh Kumar, Shri Saugata Bhattacharya, Prof. Ram Singh, Dr. Poonam Gupta and Shri Indranil Bhattacharyya attended the meeting.
After a detailed assessment of the evolving macroeconomic and financial developments and the outlook, the MPC voted unanimously to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 5.25 per cent. Consequently, the standing deposit facility (SDF) rate remains at 5.00 per cent and the marginal standing facility (MSF) rate and the Bank Rate remain at 5.50 per cent. The MPC also decided to continue with the neutral stance.
The RBI's Statement sets out various developmental and regulatory policy measures relating to regulations:
1. Draft guidelines for licensing of Urban Co-operative Banks (UCBs)
A discussion paper on Licensing of UCBs was published for stakeholder feedback on January 13, 2026 following a two decade pause on issuance of fresh licenses. On an analysis of the feedback, it has been decided to resume licensing of UCBs on ‘on tap’ basis. The draft guidelines will be issued shortly for stakeholder consultation.
2. Review of Guidelines on Concentration Risk Management - Rural Co-operative Banks
Prudential norms on Concentration Risk Management of Rural Co-operative Banks (RCBs) are governed by the Credit Monitoring Arrangement (CMA) instructions issued in 2008. As the banking sector in general, and co-operative banking sector in particular, have undergone significant expansion and changes since then, it has been decided to review these instructions, keeping in view the objectives of developing a vibrant co-operative sector while addressing the prudential concerns arising from concentrated lending. Draft Amendment Directions in this regard are being issued for wider stakeholder consultations.
