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RBI Tightens Provisioning Norms for AIFIs: New Rules on Resolution Plans

Current · Source: Reserve Bank of India · RBI/2026-27/73 · issued 29 Apr 2026 · ~2 min read
Quick answerRBI mandates 5% additional specific provisioning on outstanding debt for All India Financial Institutions (AIFIs) under resolution plans implemented per Chapter VI-A of the Stressed Assets Directions. Standard accounts can stay standard post-resolution if plan adheres to provisions; NPAs upgraded if plan implemented. Repeated restructuring under Chapter VI-A triggers extra 5% provision each instance.
The rule, in the simplest words
How it plays out — a real example

A credit & lending officer in Indore helps a farmer restructure a ₹10 lakh loan under the new rules. She must immediately set aside an extra ₹50,000 (5%) as a safety cushion. If the farmer needs another restructuring next year, she must set aside another ₹50,000, making the total extra cushion ₹1 lakh.

What changed

RBI inserted paragraphs 47A and 47B in the AIFI Income Recognition, Asset Classification and Provisioning Directions, allowing standard accounts to remain standard post-resolution plan implementation (if plan adheres to Chapter VI-A provisions) and upgrading NPAs to standard upon plan implementation. It also added new provisioning norms (68A-68D) requiring 5% additional specific provision on outstanding debt for accounts under resolution plans implemented per Chapter VI-A, with an extra 5% for each instance of restructuring under those Directions.

What it means for you

AIFIs must now set aside additional capital for restructured loans, increasing provisioning costs and potentially impacting profitability. The upgrade path for NPAs post-resolution offers relief but comes with strict conditions. Repeated restructuring will attract cumulative provisioning, discouraging frequent restructuring and encouraging quicker resolution.

What you must do

Who it affects

All India Financial Institutions (AIFIs), Borrowers with restructured loans under AIFI resolution plans, Risk and compliance teams at AIFIs, Auditors and regulators monitoring AIFI asset quality

❓ Common questions

Can a standard account remain standard after a resolution plan is implemented?

Yes, if the resolution plan adheres to the provisions of Chapter VI-A of the Reserve Bank of India (All India Financial Institutions – Resolution of Stressed Assets) Directions, 2025, the account can retain its standard classification upon implementation.

What happens to an NPA account that is restructured under a resolution plan?

It will be upgraded to 'Standard' upon implementation of the resolution plan, provided the plan follows the specified provisions of Chapter VI-A.

When can the additional 5% provision be reversed?

The provision can be reversed after the borrower pays at least 20% of the outstanding debt with the bank without slipping into NPA post-restructuring and without another restructuring. For non-fund-based or cash credit/overdraft facilities, reversal is allowed after one year post-restructuring, provided no default during that period.

📜 Read the original circular — full text as issued by RBI
RBI/2026-27/73 DOR.STR.REC.62/21-04-048/2026-27 April 29, 2026 Reserve Bank of India (All India Financial Institutions – Income Recognition, Asset Classification and Provisioning) Amendment Directions, 2026 Please refer to Reserve Bank of India (All India Financial Institutions – 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 section 45L of the Reserve Bank of India Act, 1934 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 47A and 47B shall be inserted as under: 47A. If a resolution plan is implemented in adherence to the provisions of Chapter VI-A of the Reserve Bank of India (All India Financial Institutions – 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. 47B. Accounts which are restructured under paragraph 119I to 119Q of the Reserve Bank of India (All India Financial Institutions – Resolution of Stressed Assets) Directions, 2025 dated November 28, 2025 , where a subsequent restructuring is necessitated under the provisions of Chapter VI-A of the afore-mentioned Directions, shall continue to be classified as ‘Standard’. ii. The following shall be inserted in Chapter IV - Provisioning Norms B1. Additional specific provisioning in case of resolution plan implemented under Chapter VI-A of the Reserve Bank of India (All India Financial Institutions – Resolution of Stressed Assets) Directions, 2025 68A. An AIFI 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 VI-A of the Reserve Bank of India (All India Financial Institutions – 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. 68B. For accounts where repeated restructuring is necessitated in terms of Chapter VI-A of the Reserve Bank of India (All India Financial Institutions – Resolution of Stressed Assets) Directions, 2025 , an AIFI 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. 68C. The additional specific provisions maintained in terms of paragraph 68A and 68B 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. 68D. 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 68A and 68B 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 provision, mentioned above, shall be tested from the date of rectification of default. iii. In Chapter V – Income Recognition, paragraph 116A and 116B shall be inserted as under: 116A. Interest income recognition in respect of borrower accounts where resolution plan has been implemented in terms of Chapter VI-A of the Reserve Bank of India (All India Financial Institutions – Resolution of Stressed Assets) Directions, 2025 dated November 28, 2025 , shall be on accrual basis. 116B. For accounts specified at paragraph 68B 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/2026-27/73 · issued 29 Apr 2026. The plain-English explanation above is BankPulse’s own independent summary.
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Who does what — compliance checklist
💰 Credit
  • Update internal policies to include 5% additional specific provisioning for all resolution plans implemented under Chapter VI-A of the Reserve Bank of India (All India Financial Institutions – Resolution of Stressed Assets) Directions, 2025.
  • Track repeated restructuring instances under Chapter VI-A and apply additional 5% provisioning for each instance.
  • Ensure systems can reverse provisions only when borrower pays at least 20% of the outstanding debt with the bank without slipping into NPA post-restructuring and without another restructuring.
  • Train credit and risk teams on the new classification rules for standard accounts and NPA upgrades post-resolution plan implementation.
📜 Compliance
  • For non-fund-based or cash credit/overdraft facilities, set up monitoring to reverse provisions after one year of no default post-restructuring.
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 Credit Manager at a bank this circular applies to (All India Financial Institutions (AIFIs), Borrowers with restructured loans under AIFI resolution plans, Risk and compliance teams at AIFIs, Auditors and regulators monitoring AIFI asset quality), your first concrete step on “RBI Tightens Provisioning Norms for AIFIs: New Rules on Resolution Plans” is: “Update internal policies to include 5% additional specific provisioning for all resolution plans implemented under Chapter VI-A of the Reserve Bank of India (All India Financial Institutions – Resolution of Stressed Assets) Directions, 2025.” (RBI issued this 29 Apr 2026).

  1. Circular: RBI/2026-27/73 -- RBI Tightens Provisioning Norms for AIFIs: New Rules on Resolution Plans
  2. Issued: 29 Apr 2026
  3. Action required: Update internal policies to include 5% additional specific provisioning for all resolution plans implemented under Chapter VI-A of the Reserve Bank of India (All India Financial Institutions – Resolution of Stressed Assets) Directions, 2025.
  4. Action required: Track repeated restructuring instances under Chapter VI-A and apply additional 5% provisioning for each instance.
  5. Action required: Ensure systems can reverse provisions only when borrower pays at least 20% of the outstanding debt with the bank without slipping into NPA post-restructuring and without another restructuring.
  6. Action required: For non-fund-based or cash credit/overdraft facilities, set up monitoring to reverse provisions after one year of no default post-restructuring.
  7. Action required: Train credit and risk teams on the new classification rules for standard accounts and NPA upgrades post-resolution plan implementation.
  8. Owner: ____________ Target date: ____________
  9. Board/committee approval needed? Y / N
  10. 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.

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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=13439&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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