Urban co-operative banks (UCB) will have to send an instant alert to the Reserve Bank of India (RBI) about any loan of more than Rs 5 crore sanctioned, according to a new set of guidelines issued by the central bank last week.

The banks have also been asked restrict half of their loans to amounts of less than Rs 25 lakh and increase their exposure to “priority sector” from the current 40 per cent of the total lending to 75 per cent over the next three years.

In another significant step, UCBs with deposits of Rs 100 crore or more will have to appoint a board of management in addition to the existing board of directors.

The guidelines, which have not gone down well with the banks, come a little more than three months after the collapse of the Punjab and Maharashtra Co-operative Bank (PMC). Out of its entire loan book of Rs 10,000 crore, the bank had lent nearly Rs 6,500 crore to just one company – real estate firm HDIL.

According to the guidelines, the board of management’s approval will be integral in decisions such as expansion of operations, disbursal of high-value loans and recruitment in senior positions, including the chief executive officer.