The Reserve Bank of India (RBI) on August 05, 2026, issued press release on Statement on Developmental and Regulatory Policies.
The statement outlines important regulatory initiatives aimed at strengthening and modernising India’s banking and co-operative sector. First, the licensing of Urban Co-operative Banks (UCBs) is set to resume after nearly two decades, with a shift to an “on-tap” licensing framework, allowing applications throughout the year instead of fixed windows. Draft guidelines will soon be released for stakeholder consultation, marking a significant step toward expanding the co-operative banking network.
Second, the concentration risk management guidelines for Rural Co-operative Banks (RCBs) are being reviewed. The existing norms, based on 2008 Credit Monitoring Arrangement (CMA) instructions, are considered outdated given the sector’s growth. The proposed revisions aim to balance sector development with prudent risk control, especially in managing risks arising from excessive exposure to specific borrowers or sectors.
Third, the interest rate framework on advances is set for rationalisation across all regulated entities. The objective is to create a more transparent, consistent, and principle-based system by harmonising lending rate guidelines, addressing issues in current benchmarks like MCLR and EBLR, and standardising practices such as day count conventions and reset dates. These reforms are expected to improve loan pricing transparency, consumer protection, and monetary policy transmission, with draft directions to be released for public feedback soon.
[Press Release: 2026-2027/811]
