The update directly regulates non-bank financial companies' lending and credit operations through prudential norms on asset classification, provisioning, and income recognition for borrower accounts and resolution plans, matching the Strong Yes criteria for Lending Providers as non-banking credit providers.
Low confidence — REQUIRES HUMAN REVIEW. While NBFCs may offer diverse financial services, this update focuses exclusively on credit provisioning and asset classification for lending operations, not investment services or asset management.
Specialism
The RBI amendments directly establish prudential norms for NBFCs including asset classification standards, provisioning requirements, and capital adequacy buffers tied to resolution plans and restructuring events.
Mandatory inheritance: Prudential Standards requires Governance as the parent tag, which encompasses the regulatory framework for NBFC oversight and internal control standards.
2026-04-30 10:29:50·pthandapani@vixio.com
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Notifications - Reserve Bank of India
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TITLE: India's Reserve Bank Amends Non-Banking Financial Company Income Recognition and Asset Classification Rules
BODY:
On April 29, 2026, the Reserve Bank of India (RBI) issued amendment directions to the Reserve Bank of India (Non-Banking Financial Companies – Income Recognition, Asset Classification and Provisioning) Directions, modifying prudential norms applicable to non-banking financial companies (NBFCs).
The amendments introduce provisions related to resolution plans implemented under Chapter VI-A of the Reserve Bank of India (Non-Banking Financial Companies – Resolution of Stressed Assets) Directions, 2025. Key changes include: borrower accounts classified as 'Standard' may be retained as such upon resolution plan implementation; accounts that slipped into non-performing asset (NPA) status between the calamity occurrence date and plan implementation shall be upgraded to 'Standard' upon implementation; and accounts restructured multiple times under the resolution framework shall continue to be classified as 'Standard'.
The amendments establish additional specific provisioning requirements. NBFCs must maintain an additional five percent provision of outstanding debt for borrowers with implemented resolution plans, over and above applicable prudential provisions, subject to a 100 percent ceiling. For accounts requiring repeated restructuring, NBFCs must provision an additional five percent for each restructuring instance, similarly subject to the 100 percent ceiling. These additional provisions may be written back once borrowers pay at least 20 percent of outstanding debt without slipping into NPA or requiring further restructuring.
The amendments also clarify interest income recognition: for accounts with implemented resolution plans, interest income shall be recognised on an accrual basis; for accounts requiring repeated restructuring, interest income shall be recognised on a cash basis.
These amendments come into force on July 1, 2026.
**Reference:**
Reserve Bank of India. (2026). Reserve Bank of India (Non-Banking Financial Companies – Income Recognition, Asset Classification and Provisioning) Amendment Directions, 2026. RBI/2026-27/69 DOR.STR.REC.58/21-04-048/2026-27.
Notifications - Reserve Bank of India Skip to main content Selected Selected Language हिंदी Search the Website Search Notifications ( 452 kb ) Reserve Bank of India (Non-Banking Financial Companies – Income Recognition, Asset Classification and Provisioning) Amendment Directions, 2026 RBI/2026-27/69 DOR.STR.REC.58/21-04-048/2026-27 April 29, 2026 Reserve Bank of India (Non-Banking Financial Companies – Income Recognition, Asset Classification and Provisioning) Amendment Directions, 2026 Please refer to Reserve Bank of India (Non-Banking Financial Companies – Resolution of Stressed Assets) Amendment Directions, 2026 dated April 29, 2026. 2. Consequent to the aforesaid Amendment Directions, in exercise of the powers conferred by the sections 45JA, 45L and 45M of the Reserve Bank of India Act, 1934; sections 30A and 32 of the National Housing Bank Act, 1987 and section 3 read with section 31A and section 6 of the Factoring Regulation Act, 2011, and all other laws enabling the Reserve Bank of India (hereinafter called the Reserve Bank) in this regard, the Reserve Bank being satisfied that it is necessary and expedient in the public interest so to do, hereby issues the Amendment Directions hereinafter specified. 3. These Amendment Directions modify the Directions as under: i. Paragraph 27A and 27B shall be inserted as under: 27A. If a resolution plan is implemented in adherence to the provisions of Chapter VI-A of Reserve Bank of India (Non-Banking Financial Companies – Resolution of Stressed Assets) Directions, 2025 dated November 28, 2025, borrower accounts which are classified as ‘Standard’ may be retained as such upon implementation. Borrower accounts which may have slipped into NPA between the date of occurrence of the calamity and implementation of the resolution plan, shall be upgraded as ‘Standard’, upon implementation of the resolution plan. Provided that after implementation of the resolution plan, the subsequent asset classification shall be governed by the criteria laid out in these Directions. 27B. Accounts which are restructured under paragraph 122E to 122L of the Reserve Bank of India (Non-Banking Financial Companies – Resolution of Stressed Assets) Directions, 2025 dated November 28, 2025, where a subsequent restructuring is necessitated under the provisions of Chapter VI-A of the aforesaid Directions, shall continue to be classified as ‘Standard’. ii. The following shall be inserted in Chapter II – Prudential Norms applicable to all NBFCs: C2. Additional specific provisioning in case of resolution plan implemented under Chapter VI-A of the Reserve Bank of India (Non-Banking Financial Companies – Resolution of Stressed Assets) Directions, 2025 36D. A NBFC shall make an additional specific provision of five percent of the outstanding debt in respect of borrowers, for whom a resolution plan has been implemented in terms of Chapter VI-A of the Reserve Bank of India (Non-Banking Financial Companies – Resolution of Stressed Assets) Directions, 2025. The additional specific provisions shall be over and above the applicable prudential provisions subject to a ceiling of hundred per cent. 36E. For accounts where repeated restructuring is necessitated in terms of Chapter VI-A of the Reserve Bank of India (Non-Banking Financial Companies – Resolution of Stressed Assets) Directions, 2025 , a NBFC shall make additional specific provisioning of five per cent of the outstanding debt for each instance of restructuring made under the aforesaid Directions. This additional specific provisioning shall be over and above the applicable prudential provisions subject to a ceiling of hundred per cent. 36F. The additional specific provisions maintained in terms of paragraph 36D and 36E above may be written back upon the borrower paying at least 20% of the outstanding debt with the NBFC, without slipping into NPA post implementation of the restructuring, and without being subjected to another restructuring. iii. Para 40A and 40B shall be inserted as under: 40A. Interest income recognition in respect of borrower accounts where resolution plan has been implemented in terms of Chapter VI-A of the Reserve Bank of India (Non-Banking Financial Companies – Resolution of Stressed Assets) Directions, 2025 dated November 28, 2025, shall be on accrual basis. 40B. For accounts specified at paragraph 36E of these Directions, interest income shall be recognized on cash basis. 4. The above amendment shall come into force with effect from July 1, 2026. 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