What changed
RBI issued the Second Amendment Directions, 2026 to the Commercial Banks – Credit Facilities Directions, 2025. It replaces references in paragraphs 25(1), 84, and 132 with the new 2026 directions on asset classification, provisioning, and capital charge for credit risk. Additionally, paragraph 172(3)(ii) has been deleted entirely.
What it means for you
Banks must now apply the updated asset classification and provisioning norms from the 2026 ACPIR Directions for individual loans and project finance accounts before DCCO. Risk weights and provisioning for certain exposures will follow the new standardised approach for credit risk. The deletion of paragraph 172(3)(ii) removes a specific provision, likely simplifying compliance.
What you must do
- Update internal policies and systems to reference the new 2026 ACPIR and capital charge directions for asset classification, provisioning, and risk weights.
- Train credit and risk teams on the revised NPA classification rules for project finance accounts before DCCO.
- Review and adjust reporting templates to reflect the deletion of paragraph 172(3)(ii) from the Directions.
- Prepare for the April 1, 2027 effective date by conducting impact assessments on existing loan portfolios.
Who it affects
Commercial banks in India, Credit risk management teams, Loan operations and compliance departments, Project finance lenders
When do these amendments take effect?
The amendments come into force from April 1, 2027, giving banks time to align their processes.
What is the significance of deleting paragraph 172(3)(ii)?
The deletion removes a specific provision from the Directions, likely simplifying regulatory requirements. Banks should check if any related reporting or compliance obligations are affected.
Do these changes affect existing loan accounts?
Yes, from the effective date, asset classification and provisioning for all individual loans and project finance accounts must follow the new 2026 directions, impacting existing accounts as well.