RBI asks urban co-operative banks not to lend to govt entities
May 28 2014 , Mumbai
RBI defined UCBS as needing to provide loans to lower and middle income groups, as well as agriculture and small businesses, instead of government-owned companies, which are called public sector undertakings (PSUs) in India.
"Grant of high value loans to PSUs is not consistent with the co-operative principles and dilutes the cooperative character of UCBs," the RBI said.
"In view of the above, UCBs are advised, as a matter of principle, generally not to grant large value loans to Public Sector/Government Undertakings."