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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.

The Reserve Bank of India (RBI) has released the Reserve Bank of India (non-banking financial companies – income recognition, asset classification and provisioning) amendment directions, 2026. The amending directions prescribe: Asset classification norms stipulating that borrower accounts classified as standard may be retained as such upon the implementation of a resolution plan in adherence to chapter VI-A, mandating that accounts slipping into non-performing asset (NPA) status between the calamity occurrence and plan implementation be upgraded to standard, and ensuring that accounts previously restructured requiring subsequent restructuring under chapter VI-A continue to be classified as standard. Additional specific provisioning requiring a non-banking financial company (NBFC) to make an additional specific provision of five percent of the outstanding debt for borrowers with an implemented chapter VI-A resolution plan, mandating another five percent for each instance of repeated restructuring subject to a 100 percent ceiling, and allowing these provisions to be written back upon the borrower paying at least 20 percent of the outstanding debt without slipping into NPA status or requiring further restructuring. Interest income recognition prescribing that interest income recognition for borrower accounts with a chapter VI-A resolution plan shall be on an accrual basis, while stipulating that interest income for accounts undergoing repeated restructuring must be recognized on a cash basis. The amendments will come into force with effect from July 1, 2026.

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India's Reserve Bank Amends Non-Banking Financial Company Income Recognition and Asset Classification Rules

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Reserve Bank of India Amends Rules on Income Recognition and Asset Classification for Non-Banking Financial Companies