RBI Master Circular on IRAC Norms for Advances (2023)

What changed

This master circular replaces the April 1, 2022 version, consolidating all instructions issued up to March 31, 2023. It includes updated annexes and a list of circulars consolidated in Annex 5. The core prudential norms on NPA classification, provisioning, and stressed asset resolution remain aligned with international practices.

What it means for you

Banks must continue to apply objective, recovery-based income recognition and uniform asset classification criteria. The circular reinforces existing norms on provisioning, including for standard, substandard, doubtful, and loss assets, as well as stressed asset resolution frameworks. Compliance ensures regulatory consistency and transparency in financial reporting.

What banks were required to do at the time

• Review and update internal policies to align with the latest consolidated IRAC norms.
• Ensure NPA classification and provisioning calculations reflect the circular's definitions and thresholds.
• Train credit and risk teams on the updated master circular, especially Annex 5 for referenced circulars.
• Maintain granular data and effective NPA management mechanisms as required under Part A.

Who it affects

All commercial banks (excluding RRBs), Credit risk and compliance departments, Loan officers and asset classification teams, Internal audit and regulatory reporting teams