Home › Circulars › RBI/2008-09/498

NPA Tagging Relief Extended to All Credit Societies Under On-Lending

No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2008-09/498 · issued 16 Jun 2009 · ~1 min read
Quick answerRBI extends NPA tagging concession to all credit societies under on-lending: only the irregular facility turns NPA, not all advances. Direct loans remain subject to existing rules where one NPA triggers all.

What changed

Previously, only Primary Agricultural Credit Societies (PACS) got the benefit where only the irregular facility under on-lending was classified as NPA. Now, this concession is extended to all other credit societies under the on-lending system. Direct loans and advances to a borrower remain unchanged: if one account becomes NPA, all loans to that borrower become NPA.

What it means for you

StCBs and CCBs can now apply the selective NPA tagging to all credit societies they lend to for on-lending, reducing the risk of cascading NPAs. This eases provisioning pressure for banks when only one facility turns irregular. However, for direct loans, the existing rule of tagging all accounts as NPA if one defaults continues, so banks must maintain strict monitoring.

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

Who it affects

State Co-operative Banks (StCBs), Central Co-operative Banks (CCBs), All credit societies receiving on-lending funds

❓ Common questions

Regulatory timeline

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

Does this circular change NPA rules for direct loans?

No. For direct loans and advances, the existing rule remains: if one loan account becomes NPA, all loans to that borrower are classified as NPA.

Which entities are now covered under the on-lending concession?

All credit societies under the on-lending system, in addition to Primary Agricultural Credit Societies (PACS) which were already covered.

📜 This document’s life story (1 recorded event, each backed by RBI’s own words)
Repealed by RBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
RBI’s words: “Official withdrawal register entry #1921: RPCD.CO.RF.BC.No.113/07.37.02/2008-09 — "Income Recognition, Asset Classification, Provisioning and Other Related Matters" dated June 16, 2009”
📜 Read the original circular — full text as issued by RBI
RBI/2008-09/498 RPCD.CO.RF.BC.No.113/07.37.02/2008-09 June 16, 2009 All State Co-operative Banks (StCBs) and Central Co-operative Banks (CCBs) Dear Sir, Income recognition, asset classification, provisioning and other related matters Short-term agricultural advances as well as advances for other purposes are granted by State Co-operative Banks/Central Co-operative Banks to Central Co-operative Banks/Primary Agricultural Credit Societies respectively for the purpose of on-lending.  As per extant instructions contained in paragraph 2 of the Annexure to our circular RPCD.No.BC.155/ 07.37.02/95-96 dated June 22, 1996, out of such advances granted under on-lending system, only that particular facility which becomes irregular is treated as NPA and not all other facilities granted to them. 2. On a review, it has been decided to extend the above concession to all other credit societies under on-lending system, in addition to Primary Agricultural Credit Societies. However, in respect of all direct loans and advances granted to a borrower, all such loans will become NPA even if one loan account becomes NPA, as hitherto. 3. Please acknowledge receipt to our Regional Office concerned. Yours faithfully, (B.P.Vijayendra) Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2008-09/498 · issued 16 Jun 2009. The plain-English explanation above is BankPulse’s own independent summary.
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