meta_id 3333517

On July 16, 2026, the Reserve Bank of India (RBI) issued the Reserve Bank of India (Non-Banking Financial Companies Income Recognition, Asset Classification and Provisioning) Third Amendment Directions, 2026. The amendment modifies prudential norms applicable to all non-banking financial companies (NBFCs) and addresses income recognition requirements for specified non-financial assets (SNFAs). The amendment introduces new provisions governing how NBFCs must treat accrued but unrealised interest and charges from extinguished exposures when acquiring SNFAs. Under the new rules, such accrued but unrealised interest and charges from periods prior to SNFA acquisition shall not be recognised as income upon acquisition. For any SNFA outstanding in an NBFC's books as of September 30, 2026, where such income has already been recognised, the NBFC must reverse it through the profit and loss account by September 30, 2027, to the extent it remains unrealised on that date. The amendment also establishes that any income received from an SNFA must be recognised in the income statement as "non-interest or other income" in the financial year in which it is realised. Similarly, any expenses incurred towards upkeep of an SNFA must be accounted for in the income statement in the financial year in which they are incurred. These provisions apply to all NBFCs, including those regulated under the National Housing Bank Act, 1987 and the Factoring Regulation Act, 2011. The amendment comes into force with effect from October 1, 2026. NBFCs must ensure compliance with these new income recognition requirements by the specified effective date and implement necessary accounting adjustments for any SNFAs already held on their books.