%20(500%20%C3%97%20280%20px)%20(500%20x%20300%20px)%20(42).png "The RBI has increased the limit on small-value loans from UCBs to Rs 3 crore per borrower")
- This move aims to enhance the financial soundness and resilience of UCBs by allowing them greater operational flexibility while maintaining regulatory objectives.
- New Loan Limit: The limit on small-value loans has been increased to ₹3 crore per borrower. This allows UCBs to offer larger loans to individuals and businesses.
- Regulatory Definition: Small-value loans now include loans of value not more than ₹25 lakh or 0.4% of UCBs' Tier I capital, whichever is higher, subject to the ₹3 crore ceiling.
- Operational Flexibility: UCBs now have greater operational flexibility, enabling them to better meet the financial needs of their customers.
- Financial Resilience: The move is aimed at improving the financial resilience and soundness of UCBs, ensuring they can provide stable and sustainable banking services.
Question:
Q.1 What is the new loan limit per borrower for small-value loans from Urban Co-operative Banks (UCBs) as per the RBI’s February 24, 2025, announcement?a) ₹3 crore
b) ₹2 crore
c) ₹1 crore
d) ₹5 crore
Answer: a) The Reserve Bank of India (RBI) increased the loan limit for small-value loans from UCBs to ₹3 crore per borrower. This provides greater financial flexibility to UCBs while maintaining regulatory oversight.
