Don't give big ticket loans to PSUs: RBI directs urban co-op banks

The mandate asks urban co-operative banks to stick to their character and focus on lending to low/middle income borrowers

GN Bureau | May 29, 2014



The Reserve Bank of India (RBI) has asked urban co-operative banks (UCBs) to refrain from lending to public sector undertakings (PSUs) as it "dilutes the cooperative character of UCBs."

The banking regulator has instead directed UCBs to focus on small ticket lending to low and middle income groups (retail borrowers), farmers and small businesses. However, the RBI has not defined what a large value loan is.

"UCBs are advised, as a matter of principle, generally not to grant large value loans to public sector or government undertakings," RBI said in a letter to UCBs.

Further, in a notification released on Wednesday, the apex bank said, "As you are aware, UCBs are meant primarily to meet the credit needs of the society by providing loans and advances to low/middle income groups (small borrowers), agriculture and small businesses for furthering the cause of cooperation. Grant of high-value loans to PSUs is not consistent with the co-operative principles and dilutes the cooperative character of UCBs."

The move is aimed at keeping in check the lending activities of UCBs which, the RBI observed, have been sanctioning large ticket loans to state-run firms by admitting them as nominal members.

Comments

 

Other News

CAG flags major fiscal lapses in Maharashtra

Maharashtra`s fiscal management has come under sharp scrutiny after the Comptroller and Auditor General (CAG) of India, in its State Finances Audit Report for 2024-25, flagged significant budgetary inefficiencies, accounting irregularities, understatement of key fiscal indicators and widespread governanc

The health sector research we are not doing

Some neglect is loud. This kind is quiet. It sits in research never commissioned, data never collected, questions never asked. In South Asia, that quiet has let the region’s worst health problems stay understudied, underfunded, and out of sight of those who could act.  

Study flags accessibility and last-mile challenges on Mumbai Metro Aqua Line

Mumbai Metro Line 3 (Aqua Line), the city`s first fully underground metro corridor and one of its largest public transport investments, represents a major engineering achievement and has been widely welcomed by commuters. However, the overall commuter experience continues to be constrained by accessibili

Centre intensifies preparedness as El Niño threat looms

Amid uncertainty in the southwest monsoon due to the potential impact of El Niño, the government is addressing the situation with comprehensive preparedness, a clear strategy, and strong ground-level action. While challenges remain, the entire system has been activated in advance and is working proa

India is crossing a climate threshold

On June 28, Delhi recorded a maximum temperature of 41.3°C, four degrees above the seasonal normal. But the “feels like” temperature, which factors in humidity, showed more than 51°C. What the body experienced was very different from what the thermometer recorded.  India`

The Geography of India’s inflation

India today finds itself in an unusual position. At a time when geopolitical conflicts, trade fragmentation, and supply-chain disruptions are reshaping the global economy, the country`s macroeconomic fundamentals remain relatively upwards. Growth remains among the highest in the world, inflation has larg





Archives

Current Issue

Opinion

Facebook Twitter Google Plus Linkedin Subscribe Newsletter

Twitter