The Reserve Bank of India has taken new steps to strengthen cooperative banks

Current Context: On 11 February 2026, RBI (with Government consultation) announced new measures for cooperative banks, especially UCBs.

• Priority Sector Lending (PSL): From 19 Jan 2026, loans by banks to the National Cooperative Development Corporation (NCDC) for on‑lending to cooperatives are PSL‑eligible, boosting credit flow.
• Branch Expansion: UCBs can now open up to 15% of existing branches or max 10 new branches annually without prior RBI approval, widening outreach.
• Housing Loan Limit: Exposure cap raised from 10% to 25% of total loans, strengthening affordable housing finance.
• Governance Reform: Director tenure in cooperative banks extended from 8 years to 10 years, ensuring continuity and experienced oversight.
• Supportive Steps: RBI nodal officer for UCBs, reduced PSL targets for some banks (e.g., 75% → 60%), digital inclusion via Aadhaar Enabled Payment System, and Mission SAKSHAM for training and capacity building.
• Overall Aim: Improve financial health, governance, deposit security, credit availability, and digital inclusion in the cooperative banking ecosystem.

Question:

Q.1 RBI reduced the Priority Sector Lending (PSL) target for certain cooperative banks from:
a) 80% to 65%
b) 75% to 60%
c) 70% to 55%
d) 85% to 70%

Answer: b) PSL targets were reduced from 75% to 60% for some banks, easing compliance burden while maintaining credit flow.