What changed
The RBI has amended its Directions on income recognition, asset classification, and provisioning for commercial banks. Paragraph 117 under Chapter IV has been deleted, allowing banks to reverse released provisions or transfer them to General Reserve. The amendment will come into force from January 1, 2026.
What it means for you
The amendment provides commercial banks with more flexibility in managing their provisions. By deleting Paragraph 117, banks can now reverse released provisions or transfer them to General Reserve, which may help improve their financial performance. This change may also impact banks' risk management practices and provisioning norms.
What you must do
- Review current provisioning norms and practices
- Assess the impact of the amendment on financial performance
- Update risk management practices and provisioning norms as needed
Who it affects
Commercial banks, Banking sector, Financial institutions
Regulatory timeline
- Published by RBI 06 Jul 2026, 06:03 IST
- Stated effective date effective January 1, 2026
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What is the effective date of the amendment?
January 1, 2026
What has been deleted from the Directions?
Paragraph 117 under Chapter IV
What can banks do with released provisions?
Reverse them or transfer them to General Reserve