TITLE: India's Reserve Bank Issues Final Directions on Asset Classification and Provisioning for Commercial Banks
BODY:
On April 27, 2026, the Reserve Bank of India (RBI) issued final Directions on Asset Classification, Provisioning, and Income Recognition for Commercial Banks. The RBI had previously released draft Directions for stakeholder feedback on October 7, 2025. Following examination of feedback received, the RBI incorporated modifications into the final Directions.
The final Directions are accompanied by 13 Amendment Directions and one Repeal Direction affecting multiple regulatory frameworks for commercial banks and related institutions. These include amendments to directions on resolution of stressed assets, concentration risk management, classification and valuation of investment portfolios, credit risk management, credit cards and debit cards issuance and conduct, asset liability management, credit facilities, financial statements presentation and disclosures, transfer and distribution of credit risk, treatment of wilful defaulters and large defaulters, and prudential norms on capital adequacy. The RBI also issued amendments to directions applicable to non-operative financial holding companies and urban cooperative banks regarding resolution of stressed assets. Additionally, the RBI repealed the Reserve Bank of India (Commercial Banks – Income Recognition, Asset Classification and Provisioning) Directions.
The Directions will come into effect on April 1, 2027. The RBI indicated that separate Directions on Asset Classification, Provisioning, and Income Recognition for All India Financial Institutions will be issued at a later date.
**Reference:**
Reserve Bank of India Press Release: 2026-2027/150 (April 27, 2026)