Home › Circulars › RBI/2009-2010/282

Floating Provision Norms Extended to AIFIs

No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2009-2010/282 · issued 05 Jan 2010 · ~1 min read
Quick answerRBI has directed select AIFIs (Exim Bank, NABARD, NHB, SIDBI) to follow bank-like rules on floating provisions. These can only be used for specific provisions in impaired accounts under extraordinary circumstances, with board approval and prior RBI permission.

What changed

RBI noticed some AIFIs were using floating provisions to make specific provisions by writing them back above the line. Now, AIFIs must follow the same prudential norms on creation and utilisation of floating provisions as banks, as per earlier circulars from June 2006 and March 2007.

What it means for you

AIFIs can no longer freely use floating provisions to meet specific provisioning needs. They must treat these provisions as a buffer for extraordinary contingencies only, requiring board approval and RBI nod. This tightens provisioning discipline and aligns AIFIs with banking norms.

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

Exim Bank, NABARD, NHB, SIDBI, All-India Financial Institutions (AIFIs)

❓ Common questions

Regulatory timeline

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

Can AIFIs still use floating provisions for routine provisioning?

No. Floating provisions can only be used for specific provisions in impaired accounts under extraordinary circumstances, with board approval and prior RBI permission.

What happens if an AIFI has already used floating provisions incorrectly?

The circular does not specify penalties, but AIFIs must immediately align with the new norms and seek RBI guidance if needed.

Are these norms new for AIFIs?

Yes, this circular extends existing bank guidelines on floating provisions to AIFIs for the first time, effective from January 5, 2010.

📜 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Repealed by RBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)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 #1766: DBOD.No.FID.FIC.7/01.02.00/2009-10 — "Prudential Norms on Creation and Utilisation of Floating Provisions" dated January 5, 2010”
📜 Read the original circular — full text as issued by RBI
RBI/2009-2010/282 DBOD.No.FID.FIC.7/01.02.00/2009-10 January 5, 2010 The CEOs of the select All-India Term-lending and Refinancing Institutions (Exim Bank, NABARD, NHB and SIDBI) Dear Sir, Prudential Norms on Creation and Utilisation of Floating Provisions It has come to our notice that some of All India Financial Institutions (AIFIs) are using floating provisions to make specific provisions to meet the prudential guidelines by writing back the provisions to income account above the line. 2.   As you are aware that banks are permitted to use the floating provisions only for contingencies under extraordinary circumstances for making specific provisions in impaired accounts after obtaining Board’s approval and with prior permission of RBI.  It is felt necessary to issue similar guidelines to AIFIs also. 3.  It is, therefore, advised that all AIFIs should also follow extant guidelines on `Prudential Norms on Creation and Utilization of Floating Provisions' issued to banks.  Accordingly, we advise that guidelines issued to banks vide our circular No. DBOD.BP.BC. 89 / 21.04.048/ 2005-06 dated June 22, 2006 and circular No. DBOD.BP.BC.68/ 21.04.048/2006-07 March 13, 2007 (copy enclosed) shall mutatis mutandis apply to AIFIs. 4. In this connection, your attention is also invited to our Circular No. DBOD. FID. FIC 6 / 01. 02. 00 dated December 8, 2009  on Provisioning Coverage for Advances. Please acknowledge receipt. Yours faithfully, (Vinay Baijal) Chief General Manager Encls : As above
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2009-2010/282 · issued 05 Jan 2010. The plain-English explanation above is BankPulse’s own independent summary.
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Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=5449&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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