Reserve Bank of India (All India Financial Institutions – Income Recognition, Asset Classification and Provisioning) Directions, 2025 (Updated as on July 01, 2026)
UR
- Applies toAll India financial institutions
- StatusIn force
- ImportanceMUST READ
- IssuedNov 28, 2025
- Last amendedJul 16, 2026 · 2 incorporated
- Length36 points in 5 sections · 4 min read
The four dates on this rule
- PublishedNov 28, 2025The day RBI put this document out.
- Starts to applyNot statedNot stated separately in this document. Read the rule itself before you assume a start date.
- Time to get readyNot statedCannot be worked out until the day it starts to apply is known.
- 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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33 of the 36 points name no product and bind every product. All products.
Numbers to remember
| ₹5 crore | Property held against a bad loan of ₹5 crore or more is valued once in three years. RBI Para 16 |
| thirty days | An account overdue for thirty days is tagged SMA-1 at that day's run. RBI Para 24 |
| 90 days | A term loan becomes an NPA if interest or principal is overdue for more than 90 days. RBI Para 29(1) |
| 1 percent | All India financial institutions must set aside up to 1 percent for standard assets, depending on the sector. RBI Para 65(2) |
| 25 percent | Provisioning on the secured part of doubtful loans rises from 25 percent to 100 percent over time. RBI Para 75 |
What it says
Chapter I. Preliminary
Background
1. Bad loan norms
This paper sets when a loan turns bad for all India financial institutions.
2. Start date
These Directions came into effect on the day RBI issued them.
3. Who is covered
These Directions apply to every all India financial institution.
4. Restructured accounts follow that book
Restructured accounts follow the stressed assets rules for income and grading.
5. Overdue means unpaid on time
Any sum not paid on its due date is overdue.
6. What the cover ratio shows
The provision cover ratio is provisions against gross bad loans.
7. Security must be tangible
Security means a tangible charge; a guarantee or comfort letter does not count.
8. Short crops defined by exclusion
A short duration crop is any crop that is not a long duration crop.
9. Wilful defaulter defined elsewhere
A wilful defaulter has the meaning given in the wilful defaulters rules.
10. Property terms defined elsewhere
Commercial real estate and project finance take their meaning from the lending rules.
Chapter II. General Instructions
1. Value big collateral triennially
Property held against a bad loan of ₹5 crore or more is valued once in three years.
2. Board must act on quality
The Board must take every step to stop asset quality falling.
3. Fit schedule to cash flow
Repayment dates must be set from the borrower's real cash flow.
4. Name the repayment start
Where there is a moratorium, the loan agreement must name the exact repayment start date.
5. Disclose in the notes
The position must be shown in the notes to the accounts.
Chapter III. Asset Classification
Must know
1. Thirty days makes SMA-1
An account overdue for thirty days is tagged SMA-1 at that day's run.
BankPulse example. An instalment falls due on 1 September and is not paid. The account is tagged SMA-1 when 30 days of continuous overdue are complete. That is at the day-end run on 1 October.
2. Sixty days makes SMA-2
An account overdue past SMA-1 is tagged SMA-2 at the next month's day-end run.
3. 90-day NPA test
A term loan becomes an NPA if interest or principal is overdue for more than 90 days.
Do it
4. Build an early warning system
A management system must catch signs of distress early, account by account.
5. Flag at day end
An account must be flagged overdue in the day-end run for its due date.
6. Objective tests only
Bad loan grading must follow objective tests so the norms are applied alike.
7. Prove a real cure
Where an account is said to be cured, satisfactory evidence must go to the auditors.
Background
8. The calendar date rules
The SMA or bad loan date is the calendar date of the day-end run.
9. Borrower-level classification
If one loan turns bad, all the borrower's facilities are classified as NPA.
10. Security does not save it
Security or the borrower's net worth does not stop an advance being called bad.
11. Letter of credit bills apart
A bill discounted under a letter of credit need not turn bad with the rest.
12. Derivative dues pull the rest
Where a derivative overdue turns bad, every funded facility of that client turns bad.
13. Consortium goes by own record
In a consortium each member grades the account on its own record of recovery.
14. State guarantee does not save
A State guaranteed advance still turns bad once dues stay overdue.
15. Plan sets the later grade
After a resolution plan is put in place, later grading follows these Directions.
Chapter IV. Provisioning Norms
1. Standard asset provisioning
All India financial institutions must set aside up to 1 percent for standard assets, depending on the sector.
2. Rising secured provisioning
Provisioning on the secured part of doubtful loans rises from 25 percent to 100 percent over time.
3. Writing off loss assets
All India financial institutions should write off loss assets completely.
4. Full provision alternative
If a loss asset stays on the books, all India financial institutions must fully provide for it.
Chapter VI. Repeal and Other Provisions
1. Older rules cancelled
This document cancels the older income recognition and provisioning rules for Commercial Banks.
2. Old cases continue
Penalties and legal cases already started under the old rules still continue.
How this rule has changed
The points above are the rule as it stands today, after every change listed here.
Issued on Nov 28, 2025. This is the date RBI put the rule out.
Changed on Apr 29, 2026.
- Upgrade NPAs to standard. NPAs during calamity period can move back to standard when the resolution plan is implemented.
- Post plan classification. After the plan, later asset class must follow the main Directions.
- Provision ceiling 100 percent. These extra provisions are over normal rules but cannot cross one hundred percent of the exposure.
- Repeat provision ceiling. These repeat restructuring extra provisions are also capped at one hundred percent of exposure.
Changed on Jul 16, 2026.
- Do not book old interest. Do not book past unpaid interest or charges as income when you buy a specified non-financial asset.
- How to show SNFA income. Show any money received from a specified non-financial asset as non-interest or other income in that year.
- How to show SNFA expenses. Show upkeep costs of a specified non-financial asset as expenses in the year you spend the money.
- Effective date. These amendment rules apply from October 01, 2026.
The same subject for other kinds of institution
The same subject for other kinds of institution.
RBI income recognition and provisioning rules for commercial banks
RBI income recognition and provisioning rules for local area banks
RBI income recognition and provisioning rules for regional rural banks
RBI income recognition and provisioning rules for rural co-operative banks
RBI income recognition and provisioning rules for small finance banks
RBI income recognition and provisioning rules for urban co-operative banks
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