RBI Issues Final Directions on Asset Classification, Provisioning, and Income Recognition for Commercial Banks

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RBI Issues Final Directions on Asset Classification, Provisioning, and Income Recognition for Commercial Banks

RBI Press Releases

Published April 27th, 2026

Detected April 28th, 2026

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Summary

The Reserve Bank of India has issued final Directions on Asset Classification, Provisioning, and Income Recognition for Commercial Banks, incorporating feedback from the October 7, 2025 draft. The RBI simultaneously released 13 Amendment Directions covering areas including stressed asset resolution, concentration risk, credit risk management, credit cards, asset-liability management, capital adequacy, and wilful defaulter treatment, plus one Repeal Direction. These Directions will take effect on April 1, 2027, creating significant new compliance obligations for all Indian commercial banks, urban cooperative banks, and non-operative financial holding companies.

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What changed

The RBI has finalized and issued comprehensive Directions governing how commercial banks classify assets, calculate provisioning requirements, and recognize income. The final Directions incorporate stakeholder feedback from the October 2025 draft and are accompanied by 13 sector-specific Amendment Directions addressing stressed assets, credit risk, concentration risk, credit card operations, investment portfolio valuation, capital adequacy, and treatment of wilful defaulters. One existing Direction has been repealed.

Affected institutions—commercial banks, urban cooperative banks, and non-operative financial holding companies—must prepare for the April 1, 2027 effective date by reviewing and updating credit policies, NPA classification procedures, provisioning methodologies, income recognition practices, and related internal controls. The comprehensive nature of these Directions suggests a coordinated overhaul of Indian banking prudential standards across multiple risk management areas.

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Apr 28, 2026

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Press Releases

| () | |
| Date : Apr 27, 2026 | |
| RBI issues Directions on Asset Classification, Provisioning, and Income Recognition for Commercial Banks | |
| | The Reserve Bank of India had, on October 07, 2025, issued the Reserve Bank of India (Commercial Banks-Asset Classification, Provisioning and Income Recognition) Directions, 2025 for stakeholder feedback.

Feedback received on the draft Directions has been examined and consequent modifications, as deemed appropriate, have been suitably incorporated in the final Directions. A statement on the feedback received on the draft Directions is provided in the Annex.
Accordingly, the Reserve Bank has today issued the final Directions. Consequentially, 13 Amendment Directions and one Repeal Directions have also been issued as given below:
These Directions shall come into effect from April 01, 2027.
The Directions on Asset Classification, Provisioning, and Income Recognition for All India Financial Institutions shall be issued separately.

(Brij Raj)
Chief General Manager

Press Release: 2026-2027/150 | | The Reserve Bank of India had, on October 07, 2025, issued the Reserve Bank of India (Commercial Banks-Asset Classification, Provisioning and Income Recognition) Directions, 2025 for stakeholder feedback.

Feedback received on the draft Directions has been examined and consequent modifications, as deemed appropriate, have been suitably incorporated in the final Directions. A statement on the feedback received on the draft Directions is provided in the Annex.
Accordingly, the Reserve Bank has today issued the final Directions. Consequentially, 13 Amendment Directions and one Repeal Directions have also been issued as given below:
These Directions shall come into effect from April 01, 2027.
The Directions on Asset Classification, Provisioning, and Income Recognition for All India Financial Institutions shall be issued separately.

(Brij Raj)
Chief General Manager

Press Release: 2026-2027/150 |
| The Reserve Bank of India had, on October 07, 2025, issued the Reserve Bank of India (Commercial Banks-Asset Classification, Provisioning and Income Recognition) Directions, 2025 for stakeholder feedback.

Feedback received on the draft Directions has been examined and consequent modifications, as deemed appropriate, have been suitably incorporated in the final Directions. A statement on the feedback received on the draft Directions is provided in the Annex.
Accordingly, the Reserve Bank has today issued the final Directions. Consequentially, 13 Amendment Directions and one Repeal Directions have also been issued as given below:
These Directions shall come into effect from April 01, 2027.
The Directions on Asset Classification, Provisioning, and Income Recognition for All India Financial Institutions shall be issued separately.

(Brij Raj)
Chief General Manager

Press Release: 2026-2027/150 | |

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Named provisions

Reserve Bank of India (Commercial Banks-Asset Classification, Provisioning and Income Recognition) Directions, 2025

Related changes

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Source

RBI Press Releases rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx

Banking & Finance

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Last updated

April 28, 2026

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Classification

Agency

RBI

Published

April 27th, 2026

Compliance deadline

April 1st, 2027 (338 days)

Instrument

Rule

Branch

Executive

Legal weight

Binding

Stage

Final

Change scope

Substantive

Document ID

Press Release: 2026-2027/150

Supersedes

Reserve Bank of India (Commercial Banks-Asset Classification, Provisioning and Income Recognition) Directions, 2025 (October 7, 2025 draft)

Who this affects

Applies to

Banks

Industry sector

5221 Commercial Banking

Activity scope

Asset classification Provisioning for loan losses Income recognition Credit risk management

Geographic scope

India IN

Taxonomy

Primary area

Banking

Operational domain

Compliance

Compliance frameworks

Basel III

Topics

Securities Financial Services

RBI Issues Final Directions on Asset Classification, Provisioning, and Income Recognition for Commercial Banks

Summary

About this source

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Press Releases

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