Current · Source: Reserve Bank of India · RBI/2026-27/57 · issued 29 Apr 2026 · ~2 min read
Quick answerRBI amended UCB IRAC norms to align with new stressed asset resolution directions. Key changes: standard accounts under resolution plans stay standard, NPAs upgraded on plan implementation, and 5% additional provisioning required for each restructuring under Chapter IV-A.
The rule, in the simplest words
If a bank and a borrower agree on a plan to fix a loan (called a 'resolution plan'), and the loan was 'Standard' (not in trouble), it stays 'Standard'.
If a loan was already a 'NPA' (non-performing asset, meaning the borrower stopped paying), it can become 'Standard' again once the fix-plan is fully done.
Every time a bank uses a fix-plan for a loan, it must set aside an extra 5% of the loan amount as a safety cushion (called 'additional provisioning').
If a borrower needs multiple fix-plans, the bank must set aside an extra 5% for each new plan.
The bank can get back some of that extra safety cushion if the borrower pays back 20% of the debt without missing payments, or goes one year without defaulting on non-fund/cash credit facilities.
How it plays out — a real example
A co-operative bank branch officer in Indore has a borrower whose business loan turned into a NPA. The officer works out a resolution plan under the new rules. Because the plan is followed correctly, the loan is upgraded back to 'Standard' status. The officer also makes sure the bank sets aside an extra 5% of the loan amount as a safety cushion, as required by the new rules.
What changed
Paragraphs 48(4) and 48(5) of the existing IRAC directions for UCBs have been deleted. New paragraphs 53A and 53B clarify asset classification for accounts under resolution plans: standard accounts remain standard, and NPAs can be upgraded upon plan implementation. Additionally, new paragraphs 89A-89D mandate 5% extra provisioning for each restructuring under Chapter IV-A of the stressed assets directions, with write-back conditions.
What it means for you
UCBs now have clearer rules for classifying assets under resolution plans, reducing ambiguity on NPA upgrades. The 5% additional provisioning for each restructuring increases capital requirements, especially for repeated restructurings. Write-back provisions offer relief if borrowers meet payment or non-default conditions, incentivizing timely resolution.
What you must do
Update IRAC policies to delete old paragraphs 48(4) and 48(5) and incorporate new paragraphs 53A, 53B, and 89A-89D.
Ensure systems can track resolution plans under Chapter IV-A and apply 5% additional provisioning for each restructuring.
Train credit and risk teams on write-back conditions: 20% debt repayment without NPA slip or one-year non-default for non-fund/cash credit facilities.
Review existing resolution plan accounts to reclassify assets per new rules and adjust provisioning accordingly.
Who it affects
Urban Cooperative Banks (UCBs), Borrowers with stressed assets under resolution plans, Risk and compliance teams at UCBs
❓ Common questions
What happens to a standard account under a resolution plan?
It can be retained as 'Standard' upon implementation of the plan, provided the plan adheres to Chapter IV-A of the stressed assets directions.
When can the additional 5% provisioning be written back?
It can be reversed if the borrower pays at least 20% of outstanding debt without slipping into NPA post-restructuring and without another restructuring. For non-fund or cash credit facilities, reversal is allowed after one year if no default occurs.
Does this apply to all UCB restructurings?
No, it specifically applies to resolution plans implemented under Chapter IV-A of the Reserve Bank of India (Urban Cooperative Banks – Resolution of Stressed Assets) Directions, 2025.
📜 Read the original circular — full text as issued by RBI
RBI/2026-27/57
DOR.STR.REC.46/21-04-048/2026-27
April 29, 2026
Reserve Bank of India (Urban Cooperative Banks – Income Recognition, Asset Classification and Provisioning) Amendment Directions, 2026
Please refer to Reserve Bank of India (Urban Cooperative Banks – Resolution of Stressed Assets) Amendment Directions, 2026 dated April 29, 2026 .
2. Consequent to the aforesaid Amendment Directions, in exercise of the powers conferred by the sections 20, 21 and 35A read with the section 56 of the Banking Regulation Act, 1949 and all other laws enabling the Reserve Bank of India (hereinafter called the Reserve Bank) in this regard, the Reserve Bank being satisfied that it is necessary and expedient in the public interest so to do, hereby issues the Amendment Directions hereinafter specified.
3. These Amendment Directions modify the Directions as under:
i. Paragraph 48(4) and 48(5) shall be deleted.
ii. Paragraph 53A and 53B shall be inserted as under:
53A. If a resolution plan is implemented in adherence to the provisions of Chapter IV-A of Reserve Bank of India (Urban Cooperative Banks – Resolution of Stressed Assets) Directions, 2025 dated November 28, 2025 , borrower accounts which are classified as 'Standard' may be retained as such upon implementation. Borrower accounts which may have slipped into NPA between the date of occurrence of the calamity and implementation of the resolution plan, shall be upgraded as 'Standard', upon implementation of the resolution plan.
Provided that after implementation of the resolution plan, the subsequent asset classification shall be governed by the criteria laid out in these Directions.
53B. Accounts which are restructured under paragraph 99E to 99L of the Reserve Bank of India (Urban Cooperative Banks – Resolution of Stressed Assets) Directions, 2025 dated November 28, 2025 , where a subsequent restructuring is necessitated under the provisions of Chapter IV-A of the aforesaid Directions, shall continue to be classified as 'Standard'.
iii. The following shall be inserted in Chapter IV - Provisioning Norms
B1. Additional specific provisioning in case of resolution plan implemented under Chapter IV-A of the Reserve Bank of India (Urban Cooperative Banks – Resolution of Stressed Assets) Directions, 2025
89A. A bank shall make an additional specific provision of five percent of the outstanding debt in respect of borrowers, for whom a resolution plan has been implemented in terms of Chapter IV-A of the Reserve Bank of India (Urban Cooperative Banks – Resolution of Stressed Assets) Directions, 2025 . The additional specific provisions shall be over and above the applicable prudential provisions subject to a ceiling of hundred per cent.
89B. For accounts where repeated restructuring is necessitated in terms of Chapter IV-A of the Reserve Bank of India (Urban Cooperative Banks – Resolution of Stressed Assets) Directions, 2025 , a bank shall make additional specific provisioning of five per cent of the outstanding debt for each instance of restructuring made under the aforesaid Directions. This additional specific provisioning shall be over and above the applicable prudential provisions subject to a ceiling of hundred per cent.
89C. The additional specific provisions maintained in terms of paragraph 89A and 89B above may be written back upon the borrower paying at least 20% of the outstanding debt with the bank, without slipping into NPA post implementation of the restructuring, and without being subjected to another restructuring.
89D. If the outstanding debt post-restructuring is only in the form of non-fund-based facilities or facilities in the nature of cash credit / overdraft, the additional specific provisions made in terms of paragraph 89A and 89B above can be reversed after one year, post implementation of the restructuring, provided the borrower was not in default at any point of time during the period concerned. In case the borrower defaults during the above period, the conditions for reversal of additional specific provisions, mentioned above, shall be tested from the date of rectification of default.
iv. The following shall be inserted in part A, Chapter V – Income Recognition:
113A. Interest income recognition in respect of borrower accounts where resolution plan has been implemented in terms of Chapter IV-A of the Reserve Bank of India (Urban Cooperative Banks – Resolution of Stressed Assets) Directions, 2025 dated November 28, 2025 , shall be on accrual basis.
113B. For accounts specified at paragraph 53B of these Directions, interest income shall be recognized on cash basis.
4. The above amendment shall come into force with effect from July 1, 2026.
(Vaibhav Chaturvedi)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2026-27/57 · issued 29 Apr 2026. The plain-English explanation above is BankPulse’s own independent summary.
Ensure systems can track resolution plans under Chapter IV-A and apply 5% additional provisioning for each restructuring.
Train credit and risk teams on write-back conditions: 20% debt repayment without NPA slip or one-year non-default for non-fund/cash credit facilities.
Review existing resolution plan accounts to reclassify assets per new rules and adjust provisioning accordingly.
📜 Compliance
Update IRAC policies to delete old paragraphs 48(4) and 48(5) and incorporate new paragraphs 53A, 53B, and 89A-89D.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are a Compliance officer at a bank this circular applies to (Urban Cooperative Banks (UCBs), Borrowers with stressed assets under resolution plans, Risk and compliance teams at UCBs), your first concrete step on “UCB Stressed Asset Resolution: IRAC Norms Tweaked” is: “Update IRAC policies to delete old paragraphs 48(4) and 48(5) and incorporate new paragraphs 53A, 53B, and 89A-89D.” (RBI issued this 29 Apr 2026).
Action required: Update IRAC policies to delete old paragraphs 48(4) and 48(5) and incorporate new paragraphs 53A, 53B, and 89A-89D.
Action required: Ensure systems can track resolution plans under Chapter IV-A and apply 5% additional provisioning for each restructuring.
Action required: Train credit and risk teams on write-back conditions: 20% debt repayment without NPA slip or one-year non-default for non-fund/cash credit facilities.
Action required: Review existing resolution plan accounts to reclassify assets per new rules and adjust provisioning accordingly.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 02 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=13418&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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