Reserve Bank of India (All India Financial Institutions – Income Recognition, Asset Classification and Provisioning) Second Amendment Directions, 2026
RBI notification RBI/2026-27/198 · 16 Jul 2026
RBI notification RBI/2026-27/198 · 16 Jul 2026
Summary
Check the official recordThe Reserve Bank of India amends the Income Recognition, Asset Classification and Provisioning Directions for All India Financial Institutions. The amendment prohibits the recognition of accrued but unrealized interest or charges from extinguished exposures related to Specified Non-Financial Assets (SNFA) acquired before the acquisition date. All India Financial Institutions must reverse any such income recognized on SNFA outstanding as of September 30, 2026, through the Profit and Loss account by September 30, 2027. Institutions must recognize income from SNFA as non-interest or other income only in the financial year of realization. Institutions must account for expenses for SNFA upkeep in the financial year of incurrence. These changes take effect on October 1, 2026.
What you must do
Key dates
Who is affected
RBI/2026-27/198 DOR.STR.REC.163/21-04-048/2026-27 July 16, 2026
Reserve Bank of India (All India Financial Institutions – Income Recognition, Asset Classification and Provisioning) Second Amendment Directions, 2026
Please refer to Reserve Bank of India (All India Financial Institutions – Resolution of Stressed Assets) Second Amendment Directions, 2026 dated July 16, 2026.
Consequent to the aforesaid Amendment Directions, in exercise of the powers conferred by the section 45L of the Reserve Bank of India Act, 1934 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.
These Amendment Directions modify the Directions as under:
(i) The following shall be inserted in Chapter V – Income Recognition:
“E1. Income Recognition in case of acquisition of Specified Non-Financial Assets (SNFA)
116C. Any accrued but unrealised interest and / or charges from the extinguished exposure pertaining to periods prior to acquisition of a Specified Non-Financial Asset (SNFA), shall not be recognised as income upon acquisition of the SNFA. Where such income has been recognised in respect of any SNFA outstanding in the books of a AIFI as on September 30, 2026, it shall be reversed through Profit and Loss account, latest by September 30, 2027, to the extent remaining unrealised as on that date.
116D. Any income received from an SNFA shall be recognised in the income statement as ‘non-interest / other income’, in the financial year in which it is realised. Similarly, any expense incurred towards upkeep of an SNFA shall be accounted for in the income statement in the financial year in which it is incurred.”
(Vaibhav Chaturvedi) Chief General Manager