Reserve Bank of India (Rural Co-operative Banks – Income Recognition, Asset Classification and Provisioning) Directions, 2025 (Updated as on July 01, 2026)
UR
- Applies toRural co-operative banks
- StatusIn force
- ImportanceMUST READ
- IssuedNov 28, 2025
- Last amendedJul 16, 2026 · 3 incorporated
- Length28 points in 5 sections · 3 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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What it says
Chapter I. Preliminary
Background
1. Bad loan norms for RCBs
This paper sets when a loan turns bad for rural co-operative banks.
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. Who a rural bank is
A rural co-operative bank means a State or Central Co-operative Bank under the NABARD Act.
5. Out of order covers overdrafts
The out of order test covers every overdraft product, business or not.
6. Overdue means unpaid on time
Any sum not paid on its due date is overdue.
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. Enterprise sizes defined elsewhere
Micro, small and medium enterprise are defined by the MSME credit circular.
Chapter II. General Instructions
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.
Do it
3. Name the repayment start
Where there is a moratorium, the loan agreement must name the exact repayment start date.
4. Flag at day end
An account must be flagged overdue in the day-end run for its due date.
5. Disclose in the notes
The position must be shown in the notes to the accounts.
Background
6. The calendar date rules
The SMA or bad loan date is the calendar date of the day-end run.
Chapter III. Asset Classification
Must know
1. 180-day review rule
An account becomes an NPA if credit limits are not reviewed within 180 days.
2. Later events do not count
Events after the date must not be used to decide whether a loan is bad.
Do it
3. Fit schedule to cash flow
Repayment dates must be set from the borrower's real cash flow.
Background
4. Standard means no problem
A standard asset shows no problem and carries no more than normal risk.
5. Security does not save it
Security or the borrower's net worth does not stop an advance being called bad.
6. Moratorium delays the due date
Where a moratorium is given, the loan falls due only once that period ends.
7. Deposit-backed loans are exempt
A loan against a term deposit, NSC, KVP or life policy is not treated as bad.
8. Income is not exempt
That exemption does not extend to how income on it is taken.
9. State guarantee does not save
A State guaranteed advance still turns bad once dues stay overdue.
10. Plan sets the later grade
After a resolution plan is put in place, later grading follows these Directions.
Chapter IV. Provisioning Norms
1. Writing off loss assets
Banks should write off loss assets completely.
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 Feb 13, 2026.
- New paragraph 52A. A new paragraph 52A on income recognition policy replaces the deleted paragraph 52.
- Policy based on recovery. Each bank's income recognition policy must follow the actual recovery record of the borrower.
- Accrual on Standard credit. Banks may book income on accrual basis for all Standard credit facilities without any matching provision.
- Non Standard on cash basis. For non Standard credit, banks must book income only when they actually receive the cash.
Changed on Apr 29, 2026.
- Upgrade slipped NPAs. Accounts that became NPA in the calamity period can become standard again when the plan is implemented.
- Post plan classification. After the plan, you must classify assets as per these Directions.
- Extra over existing provisions. This extra provision is on top of normal rules, but cannot go over one hundred percent.
- Repeat extra over existing. These repeat provisions are also over normal rules, with a cap of one hundred percent.
Changed on Jul 16, 2026.
- No old interest income. Do not book past unpaid interest or charges as income when you acquire a specified non-financial asset.
- Classify income from SNFA. Show money actually received from specified non-financial assets as non-interest or other income in that financial year.
- Book SNFA expenses yearly. Record upkeep costs of specified non-financial assets as expenses in the income statement in the year you spend them.
- Start date of amendments. Apply these amendment rules 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 all India financial institutions
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 small finance banks
RBI income recognition and provisioning rules for urban co-operative banks
Other RBI rules for rural co-operative banks
RBI Kisan Credit Card rules for rural co-operative banks 2026
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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