No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2004-05/495 · issued 17 Jun 2005 · ~1 min read
Quick answerRBI ends special treatment for State government guaranteed loans. From year ending March 31, 2006, asset classification and provisioning norms apply after 180 days overdue; from year ending March 31, 2007, after 90 days. No more waiting for guarantee invocation.
What changed
Earlier, asset classification and provisioning for State government guaranteed exposures depended on whether the guarantee was invoked. Now, that link is broken. From March 2006, overdue beyond 180 days triggers NPA norms; from March 2007, the threshold drops to 90 days, matching non-guaranteed exposures.
What it means for you
Banks can no longer keep State government guaranteed loans as standard assets indefinitely while waiting for guarantee invocation. This tightens NPA recognition and forces earlier provisioning, impacting profitability and capital adequacy. Lenders must monitor these exposures more actively and adjust credit risk assessment.
Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.
What banks were required to do at the time
Review all State government guaranteed advances and investments to identify overdue accounts.
Update asset classification and provisioning systems to apply 180-day (FY2006) and 90-day (FY2007) overdue thresholds.
Train credit and risk teams on the new norms and ensure compliance from the specified dates.
Engage with State government borrowers to prevent defaults and expedite recovery on overdue accounts.
Who it affects
Regional Rural Banks
❓ Common questions
Regulatory timeline
Decoded by BankPulse2026-06-19 20:40 IST
repealed_by — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
Status change: withdrawn05 Aug 2026, 04:00 IST
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
What was the old rule for State government guaranteed exposures?
Previously, asset classification and provisioning were triggered only after the State government guarantee was invoked, allowing banks to delay NPA recognition.
When does the 90-day overdue norm apply?
From the year ending March 31, 2007, any State government guaranteed advance or investment overdue for more than 90 days will attract NPA classification and provisioning.
Does this circular apply to both advances and investments?
Yes, the revised norms cover both State government guaranteed advances and investments in State government guaranteed securities.
📜 This document’s life story (1 recorded event, each backed by RBI’s own words)
Repealed byRBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
RBI’s words: “Official withdrawal register entry #2821: RPCD.CO.RRB.No.BC.105/03.05.34/2004-05 — "Strengthening of Prudential Norms - State Government Guaranteed Exposures" dated June 17, 2005”
📜 Read the original circular — full text as issued by RBI
RBI/2004-05/495
RPCD.CO.RRB.No.BC.105/03.05.34/2004-05
June 17, 2005
All Regional Rural Banks
Dear Sir,
Strengthening of Prudential Norms - State Government guaranteed exposures
Please refer to our circular RPCD.RRB.No.BC.54/03.05.34/99-2000 dated January 14, 2000, which contained, among others, prudential norms regarding State Government guaranteed advances. At present, asset classification and provisioning requirements in respect of State Government guaranteed exposures are linked to invocation of the State Government guarantee.
2. The prudential norms pertaining to State Government guaranteed exposures, (i.e. advances and investments) have been reviewed and it has been decided to delink the requirement of invocation of State Government guarantee for asset classification and provisioning and subject them to the same norms as applicable to exposures not guaranteed by the State Governments.
3. However, with a view to enabling banks to have a smooth transition in the matter, the revised prudential norms in respect of State Government guaranteed exposures (i.e. both advances and investments) would be implemented in a phased manner as under:
a. With effect from the year ending March 31, 2006 , State Government guaranteed advance and investment in State Government guaranteed securities would attract asset classification and provisioning norms, if interest and/or principal or any other amount due to the bank remains overdue for more than 180 days.
b. With effect from the year ending March 31, 2007 , State Government guaranteed advance and investment in State Government guaranteed securities would attract asset classification and provisioning norms, if interest and/or instalment of principal or any other amount due to the bank remains overdue for more than 90 days.
4. Please acknowledge receipt to our concerned Regional Office.
Yours faithfully,
(G. Srinivasan)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2004-05/495 · issued 17 Jun 2005. The plain-English explanation above is BankPulse’s own independent summary.
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 05 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=2291&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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