The Reserve Bank of India (RBI), on July 31, 2026, issued the Reserve Bank of India (Rural Co-operative Banks – Miscellaneous) Supervisory Directions, 2026, prescribing supervisory requirements for Rural Co-operative Banks (RCBs), comprising State Co-operative Banks (StCBs) and Central Co-operative Banks (CCBs). The Directions came into force with immediate effect and consolidate provisions relating to fair lending practices and charging of interest, while repealing the earlier directions, instructions, and guidelines covering these areas.
The Directions require Rural Co-operative Banks to review and rectify unfair practices in charging interest, including charging interest from the date of actual loan disbursement instead of the sanction or agreement date, levying EMIs only on the actual disbursed amount, communicating any changes in the amortisation schedule arising from part disbursements through the Key Facts Statement (KFS), charging interest only for the period the loan remains outstanding, and avoiding collection of advance instalments while charging interest on the full loan amount. Banks have also been encouraged to use online account transfers instead of cheques for loan disbursement to enhance transparency and customer fairness.
Further, the Directions repeal the existing supervisory instructions relating to the covered areas while preserving actions taken under the earlier framework and clarify that the provisions are in addition to other applicable laws and regulations. The Reserve Bank has also retained the authority to issue clarifications for effective implementation and interpretation of the Directions.
[Notification No. RBI/DoS/2026-27/453]
