meta_id 3333521

On July 16, 2026, the Reserve Bank of India (RBI) issued the Reserve Bank of India (Commercial Banks – Income Recognition, Asset Classification and Provisioning) Second Amendment Directions, 2026. The amendment modifies existing directions governing how commercial banks recognise and account for income related to specified non-financial assets (SNFA). The amendment introduces new provisions in Chapter V – Income Recognition, specifically sections 139C and 139D. Under section 139C, accrued but unrealised interest and charges from extinguished exposures prior to acquisition of an SNFA cannot be recognised as income upon acquisition. For any such income already recognised on the bank's books as of September 30, 2026, banks must reverse it through their profit and loss account by September 30, 2027, to the extent it remains unrealised on that date. Section 139D establishes that any income received from an SNFA must be recognised as non-interest or other income in the financial year in which it is realised. Similarly, expenses incurred for upkeep of an SNFA must be accounted for in the financial year in which they are incurred. These amendments apply to all commercial banks regulated by the RBI and affect how banks classify and report income from non-financial assets on their financial statements. The RBI exercised its powers under sections 21 and 35A of the Banking Regulation Act, 1949 to issue these directions, determining them necessary and expedient in the public interest. The amendment directions come into force effective October 1, 2026, providing banks with a transition period to align their accounting practices and systems with the new requirements.