Reserve Bank of India (Non-Banking Financial Companies – Resolution of Stressed Assets) Directions, 2025 (updated as on July 1, 2026)
UR
- Applies toFinance companies
- StatusIn force
- RBI text changedRBI's text for this document has changed since BankPulse last read it. BankPulse is re-reading it. BankPulse checked all 69 points on this page against RBI's new text on 18 October 2026. Every quoted line is still in RBI's text.
- IssuedNovember 28, 2025
- Last amendedJul 16, 2026 · 2 incorporated
- Length69 points in 5 sections · 6 min read
The four dates on this rule
- PublishedNovember 28, 2025The day RBI put this document out. This is the same day as the Issued date on this rule.
- Starts to applyNovember 28, 2025The day this rule starts to apply, as RBI's own text states it.
- Time to get readyNoneIt starts to apply on the day it was published.
- Last date to actNot statedNo date to act by was found in this document. Other dates may sit inside single paragraphs.
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Numbers to remember
| 500 crore rupees | Part B covers non-deposit NBFCs with assets under 500 crore rupees. RBI Para 8 |
| 30 days | NBFCs get 30 days from a default to review the account. RBI Para 10(13) |
| ₹500 crore | An exposure of ₹500 crore or more needs two independent credit checks; others need one. RBI Para 38 |
| 180 days | Lenders get 180 days from the end of the Review Period to implement the resolution plan. RBI Para 43(1) |
| ₹1,500 crore | Chapter IV does not apply to an account with total exposure below ₹1,500 crore. RBI Para 47 |
| hundred per cent | Total provisions held are capped at a hundred per cent of the amount outstanding. RBI Para 49 |
| fifteen per cent | An extra provision of fifteen per cent is made at the end of the review period. RBI Para 64 |
| 26 per cent | The new promoter must hold at least 26 per cent and be the single largest shareholder. RBI Para 77(3) |
| three months | A settlement paid over more than three months counts as restructuring. RBI Para 89 |
| July 1, 2026 | The version in force today was updated on July 1, 2026. RBI Para 232 |
What it says
How firm is each point
Stated by RBI — RBI’s own paragraph says this. We have only made it plainer.
Our reading — BankPulse read RBI’s paragraph and shortened it. The paragraph is the authority, not this line.
Needs judgement — RBI leaves this to the bank to settle, so nobody can give you a fixed number here.
Can be read two ways
A point marked this way sits on an RBI paragraph that can honestly be read two ways. Our own sentence takes one of the two. BankPulse does not choose for you: read RBI’s own paragraph, at the number printed on the point, before you act on it.
Two ways — both, or either one. RBI’s paragraph joins two things in the and-or form. One reading: Both of them apply, together. The other: Either one of them, on its own, is enough.
Opening paragraphs
1. Settlement recognised
Settling for less money now counts as a valid way to resolve stress.
Chapter I. Preliminary
Must know
1. Part B coverage
Part B covers non-deposit NBFCs with assets under 500 crore rupees.
BankPulse example. An NBFC that does not take deposits has assets of 300 crore rupees. That is less than 500 crore, so Part B applies to it. An NBFC with 700 crore of assets is outside Part B.
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2. Bad loan rules for NBFCs
This paper sets what non-banking financial companies must do when a borrower stops paying.
Background
3. Start date
These Directions came into effect on the day RBI issued them.
4. Who is covered
These Directions apply to every non-banking financial company.
5. Core Investment Companies exempt
Core Investment Companies do not have to follow these Directions.
6. Part A coverage
Part A covers big NBFCs and any deposit-taking NBFC.
Chapter II. Definitions and General Requirements
Must know
1. 30-day review window
NBFCs get 30 days from a default to review the account.
2. Twenty per cent repaid
The specified period runs until a fifth of the principal and capitalised interest is repaid.
3. Sanctioner cannot approve
An official who sanctioned the loan may not approve its compromise settlement.
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4. Equity is left out
Only equity and paper that must turn into equity is left out of principal debt.
5. What the policy must hold
The Board policy must set out the objective grounds for relief to each kind of borrower.
6. Add ratios to the list
The list of difficulty signs must be filled out with key ratios and working measures.
7. Approval seniority rule
The officer approving a settlement must rank above whoever sanctioned the loan.
8. Report to the utilities
Financial information must be filed with the insolvency information utilities.
9. Show it in the notes
The position must be disclosed in the notes to the accounts.
Background
10. What default means
Default is non-payment of any part of a debt once it is due and payable.
11. What residual debt means
Residual debt is the principal all the lenders will still hold under the plan.
12. What restructuring means
Restructuring is giving a borrower a concession because of financial difficulty.
13. A standby line for overruns
A standby credit facility is a line set at closure to meet a cost overrun.
14. Write-off is no waiver
A technical write-off is for the books only and waives no claim on the borrower.
15. Likely default counts too
A borrower not yet in default counts if default is likely without the concession.
16. Full Board approval
Settling with a fraud or wilful defaulter account needs the full Board's approval.
17. SMA concealment penalty
Hiding SMA status brings faster provisioning or other RBI action.
18. Penalty for concealment
Hiding a loan's real health can bring RBI fines and stricter provisioning.
Chapter III. Resolution Process
Must know
1. Five hundred crore needs two
An exposure of ₹500 crore or more needs two independent credit checks; others need one.
2. Grading does not pause
Re-grading of an asset must not stop just because a plan is being considered.
3. 180 days from review end
Lenders get 180 days from the end of the Review Period to implement the resolution plan.
4. Below fifteen hundred crore
Chapter IV does not apply to an account with total exposure below ₹1,500 crore.
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5. Review together on default
Once one lender reports default, all the lenders must review the account together.
6. Decide the way forward
During the review period the lenders must jointly settle the resolution strategy.
7. Sign an inter-creditor pact
Where a plan is to be put in place, all lenders must sign an inter-creditor agreement.
8. What that pact covers
The pact must set out the rights of the majority and protect those who dissent.
9. Write the plan down
The plan must be clearly documented even where no term changes.
10. All opinions must clear RP4
Where extra opinions are taken, every one must be RP4 or better for the plan to go ahead.
11. Lenders hire the agency
The rating agency must be engaged and paid by the lenders themselves.
Background
12. Lender majority rule
Lenders holding 75% of the debt and 60% by number can bind all lenders.
13. Minimum RP4 rating
Only resolution plans rated RP4 or better for the leftover debt can proceed.
14. Exit means fully paid out
A plan built on exit or recovery counts as done only when the exposure is fully extinguished.
Chapter IV. Additional Provisioning
1. Capped at the whole amount
Total provisions held are capped at a hundred per cent of the amount outstanding.
2. Recovery action needs provision
Extra provision is needed once recovery proceedings start, until they are complete.
Chapter V. Prudential Norms Applicable to Restructuring
Must know
1. Two ratings above five hundred
An upgrade needs two ratings above ₹500 crore and one below it.
2. Fifteen per cent more
An extra provision of fifteen per cent is made at the end of the review period.
3. No reversal at that stage
Excess provisions may not be written back when the plan goes for approval.
4. Twenty-six per cent needed
The new promoter must hold at least 26 per cent and be the single largest shareholder.
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5. All must be investment grade
Where more ratings are taken, every one must be investment grade to allow an upgrade.
6. Make up any shortfall
Where provisions held fall short of what is expected, the gap must be filled.
7. New promoter must be clean
The lender must establish that the new promoter is not linked to the old one.
8. And must be in control
The new promoter must also be in control as the company and securities law define it.
Background
9. Downgrade on restructuring
A healthy loan is downgraded the moment it gets restructured.
10. Grade does not improve
A bad account keeps the same grade after restructuring as it had before.
11. New money follows the account
New finance takes the account's grade if it fails during the watch period.
12. Freeze ends on rejection
The freeze on provisions ends at once if the plan is rejected.
13. Cash basis for bad accounts
Interest on a restructured standard account is taken on accrual, on a bad one only in cash.
14. Failure restarts the clock
If the account fails during the watch period, a fresh review period begins.
Chapter VI. Special Cases of Restructuring
Must know
1. Fraud accounts barred
NBFCs cannot restructure loans linked to fraud or wilful default.
2. Settlement is not a right
A borrower cannot demand a compromise settlement; it is the lender's judgement.
3. Three months makes restructuring
A settlement paid over more than three months counts as restructuring.
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4. Most recovery, least cost
A compromise settlement must aim at the most recovery at the least cost.
5. Report upward each quarter
Settlements and write-offs must be reported to the next higher authority each quarter.
6. Top approvals to Board
Compromise settlements and write-offs approved by the chief executive or a Board committee must be reported to the Board.
7. A cooling period after settlement
A cooling period set by the Board policy must pass before fresh exposure to that borrower.
Background
8. Part settlement is restructuring
Any part settlement with the borrower also counts as restructuring.
9. The right to recover stays
A technical write-off does not weaken the right to recover from the borrower.
10. Measure against the original
After a part write-off, provisions and grading still work off the original exposure.
Chapter XV. Repeal and Other Provisions
1. Latest update
The version in force today was updated on July 1, 2026.
2. Older rules repealed
This document repeals all earlier stressed-asset rules for non-banking financial companies.
3. Old cases continue
Action already taken under the old rules stays governed by them.
4. Relation to other laws
These Directions add to other laws; they do not cancel any of them.
How this rule has changed
The points above are the rule as it stands today, after every change listed here.
Issued on November 28, 2025. This is the date RBI put the rule out.
Changed on Apr 29, 2026.
- Natural calamity meaning. Natural calamity means an event recognised under National Disaster Response Fund or State Disaster Response Fund.
- Board policy change. NBFC policy must now include rules for relief and resolution after calamities.
- Special chapter deleted. Part D of Chapter VI on special restructuring cases is now removed.
- Old relief continues. Accounts already given relief on the effective date will follow old rules, unless a fresh resolution is done later.
Changed on Jul 16, 2026.
- Defines SNFA. A specified non-financial asset is land or building a non-banking finance company takes instead of loan repayment.
- Coverage of norms. These norms apply to all specified non-financial assets, including those taken under the SARFAESI Act, 2002.
- Legacy SNFA deadline. Old specified non-financial assets on September 30, 2026 must follow these rules by September 30, 2027.
- Only for NPA accounts. Non-banking finance companies can take specified non-financial assets only for borrowers already tagged as non-performing.
The same subject for other kinds of institution
The same subject for other kinds of institution.
RBI stressed asset resolution rules for all India financial institutions
RBI stressed asset resolution rules for regional rural banks
RBI stressed asset resolution rules for rural co-operative banks
RBI stressed asset resolution rules for urban co-operative banks
Other RBI rules for NBFCs
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