Reserve Bank of India (Rural Co-operative Banks – Resolution of Stressed Assets) Directions, 2025 (Updated as on July 01, 2026)
UR
- Applies toRural co-operative banks
- StatusIn force
- RBI text changedRBI updated this document on October 01, 2026. BankPulse is re-reading it. BankPulse checked 29 points against RBI's new text on 18 October 2026. 28 stand. 1 are marked below and are being re-read.
- IssuedNov 28, 2025
- Last amendedJul 16, 2026 · 2 incorporated
- Length29 points in 5 sections · 3 min read
The four dates on this rule
- PublishedNov 28, 2025The day RBI put this document out. This is the same day as the Issued date on this rule.
- Starts to applyNov 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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What it says
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Chapter I. Preliminary
1. Bad loan rules for RCBs
This paper sets what rural co-operative banks must do when a borrower stops paying.
2. Start date
These Directions came into effect on the day RBI issued them.
3. Who is covered
These Directions apply to every rural co-operative bank.
4. What default means
Default is non-payment of any part of a debt once it is due and payable.
5. Write-off is no waiver
A technical write-off is for the books only and waives no claim on the borrower.
Chapter II. General Requirements
Must know
1. Sanctioner cannot approve
An official who sanctioned the loan may not approve its compromise settlement.
Do it
2. Settlement policy approval
The Board must approve the bank's policy for compromise settlements.
3. Approval seniority rule
The officer approving a settlement must rank above whoever sanctioned the loan.
4. What the policy must hold
The Board policy must set out the objective grounds for relief to each kind of borrower.
5. Early stress flagging
Banks must flag loan stress right away as a special mention account.
6. Report to the utilities
Financial information must be filed with the insolvency information utilities.
7. Show it in the notes
The position must be disclosed in the notes to the accounts.
Background
8. Full Board approval
Settling with a fraud or wilful defaulter account needs the full Board's approval.
Chapter III. Prudential Norms Applicable to Restructuring
1. Fraud accounts barred
Banks cannot restructure loans linked to fraud or wilful default.
Chapter IV. Special Cases of Restructuring
Must know
1. Settlement is not a right
A borrower cannot demand a compromise settlement; it is the lender's judgement.
2. Three months makes restructuring
A settlement paid over more than three months counts as restructuring.
3. 12-month lending gap
Banks must wait at least 12 months before lending again after a settlement.
BankPulse example. Suppose a settlement is agreed in March. The bank may not lend to that borrower again for at least 12 months. Its own board policy may set a longer wait, but never a shorter one. This does not cover farm credit.
Do it
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.
11. Board sets the farm gap
The cooling period for farm credit is set by the lender's own Board policy.
12. Cash settlement allowed
Banks can still settle for cash with fraud or wilful defaulter accounts.
Chapter VII. Repeal and Other Provisions
1. Older rules repealed
This document repeals all earlier stressed-asset rules for rural co-operative banks.
2. Old cases continue
Action already taken under the old rules stays governed by them.
3. 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 Nov 28, 2025. This is the date RBI put the rule out.
Changed on Apr 29, 2026.
- Board policy change. Each bank's board policy must include how it will resolve loans under Chapter IV-A after calamities.
- Policy must set terms. Board policy must lay down clear rules for what relief terms apply to different borrowers or loan types.
- Policy must set measures. Board policy must list possible relief actions and measurable checks for deciding such relief.
Changed on Jul 16, 2026.
- Policy on SNFA. Each bank must frame policy terms for how it will take specified non-financial assets and how it will sell them.
- Policy limits on SNFA. Policy must fix SNFA share of assets, who is eligible, approval levels, recovery steps before takeover, and disposal time.
- SNFA coverage. These prudential rules apply to all specified non-financial assets, including those taken under the SARFAESI Act, 2002.
- Legacy SNFA deadline. Old specified non-financial assets on books on September 30, 2026 must meet these rules by September 30, 2027.
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 urban co-operative banks
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RBI capital adequacy rules for rural co-operative banks 2025
RBI credit bureau reporting rules for rural co-operative banks 2025
RBI customer service and fair conduct rules for rural co-operative banks 2025
RBI deposit interest rate rules for rural co-operative banks 2025
RBI digital banking channel rules for rural co-operative banks 2025
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