RBI master-direction RBI/DOR/2025-26/332 · 28 Nov 2025
Official title
Reserve Bank of India (All India Financial Institutions – Resolution of Stressed Assets) Directions, 2025 (Updated as on July 1, 2026)
Summary
Check the official recordThe Reserve Bank of India establishes a framework for All India Financial Institutions (AIFIs) to identify, report, and resolve stressed assets. AIFIs must implement Board-approved policies for stress recognition, compromise settlements, and technical write-offs. The framework mandates early identification of stress through Special Mention Account (SMA) categories and requires reporting to the Central Repository of Information on Large Credits (CRILC). AIFIs must initiate a review period upon default or credit event and may implement a resolution plan, including restructuring or change in ownership. The directions specify prudential norms for asset classification, provisioning, and income recognition post-restructuring. Special provisions apply to projects under implementation and accounts impacted by natural calamities. These directions repeal previous instructions on stressed asset resolution for AIFIs.
What you must do
Key dates
Who is affected
Thresholds
Exceptions
If you do not comply
RBI/DOR/2025-26/332 DOR.STR.REC.251/21.04.048/2025-26 November 28, 2025 Previous Versions Reserve Bank of India (All India Financial Institutions – Resolution of Stressed Assets) Directions, 2025 (Updated as on July 1, 2026)
These Directions are issued with a view to providing a framework for early recognition, reporting and time bound resolution of stressed assets. As compromise settlements are a valid resolution plan, these Directions also rationalise and harmonise the instructions on compromise settlements and technical write-offs, in order to provide impetus to resolution of stressed assets in the system. Further, these Directions lay down the consolidated regulatory treatment upon change in the Date of Commencement of Commercial Operations of projects in infrastructure and non-infrastructure (including commercial real estate & commercial real estate- residential housing).
Some of the All India Financial Institutions (AIFIs) may also be involved in implementation of various forms of Debt Relief Schemes (DRS) announced by State Governments that inter alia entail sacrifice / waiver of debt obligations of a targeted segment of borrowers, against fiscal support. If such schemes are announced frequently, incommensurately, or without due consideration to the principles of financial discipline, they would negatively affect credit discipline and in the long run, may be counter-productive to the credit flow to such borrowers. Apart from the broader implications for the credit discipline and moral hazard issues, DRS also raises certain prudential concerns, which include delay in receipt of dues; mismatch between the claims admitted / submitted by the AIFIs and accepted by the concerned Government as per the terms of the scheme; mandatory requirement of fresh credit by the AIFIs, etc. These Directions also lay down certain broad principles regarding participation of AIFIs in DRS and specifies a model operating procedure, which has been shared with the State Governments for their consideration while designing and implementing such DRS to avoid any non-alignment of expectations of the stakeholders involved, including the Government, lenders, borrowers, etc.
Accordingly, in exercise of the powers conferred by Chapter IIIB of the Reserve Bank of India Act, 1934, the Reserve Bank, being satisfied that it is necessary and expedient in public interest so to do, hereby, issues these Directions hereinafter specified.
These Directions shall be called the Reserve Bank of India (All India Financial Institutions – Resolution of Stressed Assets) Directions, 2025.
These Directions shall come into force with immediate effect unless specified otherwise.
(1) ‘aggregate exposure’ shall include all fund based and non-fund based exposure, including investment exposure;
(2) ‘compromise settlement’ shall refer to any negotiated arrangement with the borrower to fully settle the claims of an AIFI against the borrower in cash.
Explanation: Compromise settlement may entail some sacrifice of the amount due from the borrower on the part of the AIFI with corresponding waiver of claims of the AIFI against the borrower to that extent.
(3) ‘credit event’ in the context of projects under implementation shall be deemed to have been triggered on the occurrence of any of the following:
(i) default with any lender;
(ii) one or more lenders determine a need for extension of the original / extended Date of Commencement of Commercial Operation (DCCO), as the case may be, of a project;
(iii) expiry of original / extended DCCO, as the case may be;
(iv) one or more lenders determine a need for infusion of additional debt;
(v) the project is faced with financial difficulty determined as per paragraphs 7 to 9;
(3A) ‘date of invocation’ for the purpose of Chapter VI-A of these Directions shall mean the date on which the borrower and the AIFI agree to proceed with a resolution plan through a documented arrangement, other than in case of deemed invocation as specified in paragraph 119N of these Directions.
(4) ‘default’ shall mean non-payment of debt (as defined under the Insolvency and Bankruptcy Code, 2016) when whole or any part or instalment of the debt has become due and payable and is not paid by the debtor or the corporate debtor, as the case may be.
(5) ‘interest during construction’ shall mean the interest accrued on debt provided by an AIFI and capitalised during the construction phase of the project;
(6) ‘lender’, in the context of project finance, shall mean any of the following entities:
(i) a Commercial Bank (including Small Finance Banks (SFBs) but excluding Payments Banks (PBs), Local Area Banks (LABs) and Regional Rural Banks (RRBs));
(ii) a Non-Banking Financial Company (NBFC) (including a Housing Finance Company (HFC));
(iii) a Primary (Urban) Cooperative Bank;
(iv) an All India Financial Institution.
(7) ‘liquidation value’ shall mean the estimated realisable value of the assets of the relevant borrower, if such borrower were to be liquidated as on the date of commencement of the Review Period;
(8) ‘monitoring period’ shall mean the period from the date of implementation of resolution plan up to the date by which at least 10 per cent of the sum of outstanding principal debt as per the resolution plan and interest capitalisation sanctioned as part of the restructuring, if any, is repaid;
