Mumbai, Aug. 7 -- The Reserve Bank of India (RBI) has proposed a comprehensive overhaul of concentration risk and lending norms for Rural Co-operative Banks (RCBs). The central bank has come up with two draft regulations for public comments, a new Reserve Bank of India (Rural Co-operative Banks - Concentration Risk Management) Directions, 2026, and amendments to the Rural Co-operative Banks - Credit Facilities Directions, 2025.

Under the draft framework, the RBI has proposed prudential exposure limits of 20% of Tier-I capital for a single counterparty and 25% for a group of counterparties. A higher limit of 30% of Tier-I capital has been proposed for exposure to a single Primary Agricultural Credit Society (PACS), subject to the relevant...