RBI allows 100% use of floating provisions for NPA coverage till March 2022
No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2021-22/28 · issued 05 May 2021 · ~1 min read
Quick answerRBI now permits scheduled commercial banks (excluding RRBs and payments banks) to utilise 100% of floating provisions and countercyclical provisioning buffer held as on Dec 31, 2020, for specific NPA provisions, with board approval, effective immediately until March 31, 2022.
What changed
Earlier, banks could use only up to 33% (as of March 2013) and 50% (as of December 2014) of these buffers. Now, the cap is raised to 100% of the buffer held as on December 31, 2020, and prior RBI approval is replaced by board approval.
What it means for you
This move helps banks conserve capital by allowing them to dip into existing buffers to cover COVID-19-related NPAs without eroding core capital. It provides immediate relief for asset quality stress, but banks must ensure board-approved policies govern such utilisation.
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 your floating provisions and countercyclical provisioning buffer balances as on December 31, 2020.
Obtain board approval for utilisation up to 100% of these buffers for specific NPA provisions.
Ensure utilisation is completed by March 31, 2022, and align with your board-approved policy.
Maintain proper documentation and disclosures as per earlier RBI guidelines on floating provisions.
Who it affects
All Scheduled Commercial Banks (excluding Regional Rural Banks and Payments Banks)
❓ Common questions
Regulatory timeline
Decoded by BankPulse2026-06-18 08:10 IST
repealed_by — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
Status change: withdrawn03 Aug 2026, 04:00 IST
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
Can we use these buffers without RBI's prior approval now?
Yes, prior RBI approval is no longer required; board approval suffices for utilisation up to 100% of the buffer held as on December 31, 2020.
What is the deadline for utilising these provisions?
The facility is available with immediate effect and must be used by March 31, 2022.
Does this apply to RRBs and Payments Banks?
No, the circular explicitly excludes Regional Rural Banks and Payments Banks.
📜 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)
📜 Read the original circular — full text as issued by RBI
RBI/2021-22/28
DOR.STR.REC.10/21.04.048/2021-22
May 5, 2021
All Scheduled Commercial Banks
(Excluding Regional Rural Banks and Payments Banks)
Dear Sir/ Madam,
Utilisation of Floating Provisions/Counter Cyclical Provisioning Buffer
Please refer to our circular DBOD.No.BP.BC.89/21.04.048/2005-06 dated June 22, 2006 and DBOD.No.BP.BC.68/21.04.048/2006-07 dated March 13, 2007 on creation, accounting, disclosures and utilisation of floating provisions by banks. Banks may also refer to our circular DBOD.No.BP.BC.87/21.04.048/2010-11 dated April 21, 2011 on creation and utilisation of ‘countercyclical provisioning buffer’, wherein we had advised that the buffer will be allowed to be used by banks for making specific provisions for non-performing assets, inter alia, during periods of system wide downturn, with the prior approval of RBI.
2. Accordingly, in terms of our circulars DBOD.No.BP.95/21.04.048/2013-14 dated February 7, 2014 and DBR.No.BP.BC.79/21.04.048/2014-15 dated March 30, 2015 , banks were allowed to utilise upto 33 per cent and 50 per cent of floating provisions/ countercyclical provisioning buffer held by them as on March 31, 2013 and December 31, 2014 respectively, for making specific provisions for non-performing assets, as per their Board approved policy.
3. In order to mitigate the adverse impact of COVID 19 related stress on banks, as a measure to enable capital conservation, it has been decided to allow banks to utilise 100 per cent of floating provisions/ countercyclical provisioning buffer held by them as on December 31, 2020 for making specific provisions for non-performing assets with prior approval of their Boards. Such utilisation is permitted with immediate effect and upto March 31, 2022.
Yours faithfully,
(Manoranjan Mishra)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2021-22/28 · issued 05 May 2021. The plain-English explanation above is BankPulse’s own independent summary.
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BankPulse Compliance Evidence Pack — generated 03 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=12082&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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