The Reserve Bank of India (RBI) has issued the draft Urban Co-operative Banks- Credit Facilities (Amendment) Directions, 2026, proposing relaxations in housing loan norms and revisions in individual unsecured loan limits for Urban Co-operative Banks (UCBs).
As per the draft directions, Tier 3 and Tier 4 UCBs will be permitted to determine the tenure and moratorium period of housing loans in accordance with their Board-approved policies. In contrast, Tier 1 and Tier 2 UCBs will continue to be governed by a maximum housing loan tenor of 20 years, including the moratorium period, with the moratorium capped at 18 months.
The RBI has also proposed revised limits for individual unsecured advances, linked to the tier of the UCB. Under the draft norms, the maximum unsecured loan per borrower has been fixed at Rs 5 lakh for Tier 1 UCBs, Rs 7.5 lakh for Tier 2 UCBs, and Rs 10 lakh for Tier 3 and Tier 4 UCBs, within the overall unsecured lending ceiling prescribed under the concentration risk framework.
Further, the RBI has clarified that moratorium in housing loans shall be permitted only for loans granted for construction of houses. Consequently, moratorium shall not be allowed in housing loans extended for the purchase of completed houses.
The proposed amendments are scheduled to come into force from October 1, 2026, or earlier if adopted in entirety by a UCB, following finalisation after public consultation.
