Reserve Bank of India (Urban Co-operative Banks – Income Recognition, Asset Classification and Provisioning) Directions, 2025 (updated as on July 01, 2026)
UR
- Applies toUrban co-operative banks
- StatusIn force
- RBI text changedRBI updated this document on October 01, 2026. BankPulse is re-reading it. BankPulse checked 28 points against RBI's new text on 18 October 2026. 26 stand. 2 are marked below and are being re-read.
- IssuedNov 28, 2025
- Last amendedJul 16, 2026 · 2 incorporated
- Length28 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 actJune 30, 2021The day by which the work this rule asks for must be finished. This document states 2 such dates; the earliest is shown.
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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.
Chapter I. Preliminary
Must know
1. Doubtful asset definition
A doubtful asset is one that has stayed substandard for 12 months.
2. Substandard asset definition
A substandard asset is one that has been an NPA for up to 12 months.
Background
3. Bad loan norms for UCBs
This paper sets when a loan turns bad for urban co-operative banks.
4. Start date
These Directions came into effect on the day RBI issued them.
5. Who is covered
These Directions apply to every urban co-operative bank.
6. Who an urban bank is
An urban co-operative bank means a Primary Co-operative Bank under the Banking Regulation Act.
7. Restructured accounts follow that book
Restructured accounts follow the stressed assets rules for income and grading.
8. Out of order covers overdrafts
The out of order test covers every overdraft product, business or not.
9. Overdue means unpaid on time
Any sum not paid on its due date is overdue.
10. Security must be tangible
Security means a tangible charge; a guarantee or comfort letter does not count.
11. Short crops defined by exclusion
A short duration crop is any crop that is not a long duration crop.
12. Enterprise sizes defined elsewhere
Micro, small and medium enterprise are defined by the MSME credit circular.
13. Property terms defined elsewhere
Commercial real estate and project finance take their meaning from the lending rules.
Chapter II. General Instructions
1. Three months for stock
A stock statement used for drawing power must not be older than three months.
2. Name the repayment start
Where there is a moratorium, the loan agreement must name the exact repayment start date.
3. Avoid repeated ad hoc renewals
Frequent ad hoc or short renewals without good reason must be avoided.
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.
Do it
3. Flag at day end
An account must be flagged overdue in the day-end run for its due date.
4. Prove a real cure
Where an account is said to be cured, satisfactory evidence must go to the auditors.
5. Fit schedule to cash flow
Repayment dates must be set from the borrower's real cash flow.
Background
6. Standard means no problem
A standard asset shows no problem and carries no more than normal risk.
7. The calendar date rules
The SMA or bad loan date is the calendar date of the day-end run.
8. Borrower-level classification
If one loan turns bad, all the borrower's facilities are classified as NPA.
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 VI. Repeal and Other Provisions
1. Older rules cancelled
This document cancels the older income recognition and provisioning rules for urban co-operative banks.
2. Old cases continue
Penalties and legal cases already started under the old rules still continue.
What RBI has fined people for under this rulebook
RBI has imposed 11 monetary penalties on this kind of lender. In each one its own stated reason names the subject of this rulebook. Each one links to the press release it was read from.
This tells you the rulebook RBI named. It does not tell you which of the points on this page was broken, because RBI does not say. Read the order itself before drawing any conclusion about your own bank.
These come from RBI press releases. The penalty tracker holds them all. It also lists the penalties we could not place on any rulebook, and the reason for each one.
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 slipped NPAs. NPAs caused between calamity and plan can be marked standard again when the resolution plan is implemented.
- Post‑plan classification. After the plan, later asset class must follow the normal rules in these Directions.
- Ceiling on extra provision. This extra provision for resolved accounts cannot push total provisions above hundred percent of the exposure.
- Ceiling on repeat provision. Extra provisions for repeat restructuring are over normal rules but capped at hundred percent in total.
Changed on Jul 16, 2026.
- Do not book old interest. Do not treat earlier unpaid interest or charges on a bought Specified Non-Financial Asset as income when you buy it.
- Classify SNFA income. Show money actually received from a Specified Non-Financial Asset as non-interest or other income in that year.
- Book SNFA expenses yearly. Record any upkeep cost of a Specified Non-Financial Asset as an expense in the year you spend it.
- Effective date. These new income and expense rules start applying 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 rural co-operative banks
RBI income recognition and provisioning rules for small finance banks
Other RBI rules for urban co-operative banks
RBI capital adequacy rules for urban co-operative banks 2025
RBI compliance officer and compliance function rules for urban co-operative banks
RBI concurrent audit rules for urban co-operative banks 2026
RBI credit bureau reporting rules for urban co-operative banks 2025
RBI credit card and debit card rules for urban co-operative banks 2025
RBI customer service and fair conduct rules for urban co-operative banks 2025
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