Reserve Bank of India (Regional Rural Banks – Income Recognition, Asset Classification and Provisioning) Directions, 2025 (updated as on July 01, 2026)
UR
- Applies toRegional rural banks
- StatusIn force
- RBI text changedRBI updated this document on October 01, 2026. BankPulse is re-reading it. BankPulse checked all 56 points on this page against RBI's new text on 18 October 2026. Every quoted line is still in RBI's text.
- IssuedNov 28, 2025
- Last amendedJul 16, 2026 · 2 incorporated
- Length56 points in 5 sections · 5 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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52 of the 56 points name no product and bind every product. All products.
Numbers to remember
| three months | A stock statement used for drawing power must not be older than three months. RBI Para 10(2) |
| six months | A delay beyond six months in renewal is not acceptable as a discipline. RBI Para 13 |
| thirty days | An account overdue for thirty days is tagged SMA-1 at that day's run. RBI Para 16 |
| three years | Those logs must be kept for at least three years and not be tampered with. RBI Para 49(3) |
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.
Chapter I. Preliminary
Background
1. Bad loan norms for RRBs
This paper sets when a loan turns bad for regional rural banks.
2. Start date
These Directions came into effect on the day RBI issued them.
3. Who is covered
These Directions apply to every regional rural bank.
4. Restructured accounts follow that book
Restructured accounts follow the stressed assets rules for income and grading.
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. What the cover ratio shows
The provision cover ratio is provisions against gross bad loans.
8. Security must be tangible
Security means a tangible charge; a guarantee or comfort letter does not count.
9. Short crops defined by exclusion
A short duration crop is any crop that is not a long duration crop.
10. Enterprise sizes defined elsewhere
Micro, small and medium enterprise are defined by the MSME credit circular.
Chapter II. General Instructions
Must know
1. Three months for stock
A stock statement used for drawing power must not be older than three months.
2. Older than that is irregular
An account run on a stock statement older than three months is irregular.
3. Three months to renew
A regular or ad hoc limit must be reviewed within three months of its due date.
4. Six months is too long
A delay beyond six months in renewal is not acceptable as a discipline.
5. 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.
6. 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
7. Name the repayment start
Where there is a moratorium, the loan agreement must name the exact repayment start date.
8. Drawings need current assets
Drawings on a working capital account must be covered by current assets.
9. Flag at day end
An account must be flagged overdue in the day-end run for its due date.
10. Disclose in the notes
The position must be shown in the notes to the accounts.
Background
11. 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. Keep logs three years
Those logs must be kept for at least three years and not be tampered with.
2. No back-end changes
Data must not be changed from the back end of the database.
Do it
3. Fit schedule to cash flow
Repayment dates must be set from the borrower's real cash flow.
4. Prove a real cure
Where an account is said to be cured, satisfactory evidence must go to the auditors.
5. Every account in the system
Every borrower account of any size must sit in the automated grading system.
6. Investments too
Investments must also be covered by the system.
7. Rules built into the system
The grading rules must be set inside the system to match the regulation.
8. System works out provisions
The provision needed must be worked out by the system on pre-set rules.
9. Income reversal by system
Income to be reversed on an impaired asset must come from the system, not by hand.
10. Update at day end
The grading status must be updated as part of the day-end run.
11. A report on demand
A grading report with real dates must be producible at any moment.
12. No manual override
There must be no hand override of the system's grading.
13. Board sets who may override
The power to allow an exception must come from the Board approved policy.
14. Every override is audited
Every override must leave an audit trail and face the concurrent and statutory auditors.
15. Reports to the Audit Committee
Detailed override reports must go to the Audit Committee regularly.
16. Log every override
Logs of every override must hold the time, the reason and who did it.
17. Keep the rules current
The system's business logic must be kept current with the regulation.
18. One customer, all facilities
The straight through run must take in every facility and holding of one customer.
19. Status must reach the core
Where grading runs outside the core system, the status must flow back into it.
20. Front end only, once cleared
A data change must come through the application itself, after clearance.
21. Keep the transaction trail
Audit trails must capture the fields needed to trace a transaction later.
22. All fields in the core
Every field needed to spot a bad loan must sit in the core system.
23. A test copy for supervisors
A test copy of the system must be open to supervisors on an onsite visit.
24. Write an operating procedure
A standard operating procedure for system grading must be written for the staff.
Background
25. Standard means no problem
A standard asset shows no problem and carries no more than normal risk.
26. Borrower-level classification
If one loan turns bad, all the borrower's facilities are classified as NPA.
27. Security does not save it
Security or the borrower's net worth does not stop an advance being called bad.
28. Income is not exempt
That exemption does not extend to how income on it is taken.
29. State guarantee does not save
A State guaranteed advance still turns bad once dues stay overdue.
30. Consortium goes by own record
In a consortium each member grades the account on its own record of recovery.
31. Plan sets the later grade
After a resolution plan is put in place, later grading follows these Directions.
32. Check before you enter
Data may be entered only after the user is checked and cleared.
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 regional rural 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 1 monetary penalty 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.
- Post plan classification. After the plan starts, later asset class for these accounts must follow the normal rules in these Directions.
- Ceiling on repeat provision. These repeat extra provisions are over prudential norms but total provision cannot be more than hundred percent.
- Default resets test. If the borrower defaults in that period, the one year no default test starts again from default fixing date.
- Cash basis interest. For accounts covered in paragraph 36B, banks must book interest income only on cash basis.
Changed on Jul 16, 2026.
- Do not book past interest. When a bank buys a specified non-financial asset, it must not book past unpaid interest or charges as income.
- Classify realised SNFA income. Money actually received from these assets must be shown as non-interest or other income in that financial year.
- Effective date. These income and expense rules will 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 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 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
Other RBI rules for regional rural banks
RBI credit bureau reporting rules for regional rural banks 2025
RBI credit card and debit card rules for regional rural banks 2025
RBI customer service and fair conduct rules for regional rural banks 2025
RBI deposit interest rate rules for regional rural banks 2025
RBI digital banking channel rules for regional rural banks 2025
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