RBI vide notification no. RBI/2019-20/171 dated March 13, 2020, it has been decided to reduce concentration risk in the exposures of primary UCBs, and to further strengthen the role of UCBs in promoting financial inclusion, it is proposed to amend certain regulatory guidelines relating to UCBs.
Prudential exposure limits:
- In the Previous Circular, Primary UCBs were permitted to have exposures up to 15 percent and 40 percent of their capital funds to a single borrower and a group of borrowers, respectively.
- Now, the prudential Exposure limits for UCBs for a single borrower/party and a group of connected borrowers/parties shall be 15 percent and 25 percent, respectively, of their tier-I capital.
- The revised exposure limits shall apply to all types of fresh exposures taken by UCBs.
- UCBs shall bring down their existing exposures which are in excess of the revised limits to within the aforesaid revised limits by March 31, 2023.
- Tier-I capital as of March 31 of the preceding financial year shall be reckoned for the purpose of fixing the exposure limits.
- All other extant instructions will remain unchanged (from the previous circular).
Revised Priority sector lending target:
- In the previous circular, the overall priority sector lending (PSL) target for UCBs stood at 40% of the adjusted net bank credit (ANBC) or credit equivalent amount of off-balance sheet exposure (CEOBSE), whichever is higher.
- Now, it has been decided that the overall PSL target for UCBs shall stand increased to 75 percent of ANBC or CEOBSE, whichever is higher.
- UCBs shall comply with the above target by March 31, 2024 as per the following milestones:
| Target date | Target percentage |
| March 31st, 2021 | 45% |
| March 31st, 2022 | 50% |
| March 31st, 2023 | 60% |
| March 31st, 2024 | 75% |
https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11819&Mode=0