RBI master-direction · 28 Nov 2025
RBI/DOR/2025-26/165 DOR.STR.REC.84/21.04.048/2025-26 November 28, 2025 Previous Versions Reserve Bank of India (Commercial Banks – Resolution of Stressed Assets) Directions, 2025 (updated as on July 01, 2026) Table of Contents Chapter I - Preliminary A. Short title and commencement B. Applicability C. Definitions Chapt…
RBI/DOR/2025-26/165 DOR.STR.REC.84/21.04.048/2025-26 November 28, 2025 Previous Versions Reserve Bank of India (Commercial Banks – Resolution of Stressed Assets) Directions, 2025 (updated as on July 01, 2026)
Table of Contents
Chapter I - Preliminary A. Short title and commencement B. Applicability C. Definitions
Chapter II - General Requirements A. Board approved policies: B. Early identification and reporting of stress C. Disclosures D. Supervisory Review
Chapter III - Resolution Process A. Review Period B. Inter-Creditor Agreement C. Resolution Plan
Chapter IV - Additional Provisioning A. Delayed Implementation of Resolution Plan – Additional Specific Provisioning
Chapter V - Prudential Norms Applicable to Restructuring A. Applicability B. Asset Classification Post Restructuring C. Additional Finance D. Asset classification upgrade after satisfactory performance E. Default by a borrower after monitoring period F. Provisioning post Restructuring G. Income Recognition H. Change in Ownership
Chapter VI - Special Cases of Restructuring A. Sale and Leaseback Transactions B. Refinancing of Exposures C. Borrowers who have committed Frauds / Malfeasance / Wilful Default D. Compromise Settlements and Technical Write-offs E. [***] F. Projects Under Implementation
Chapter VI-A – Resolution of Accounts Impacted by Calamities A. Role of State Level Bankers’ Committee (SLBC) / Union Territory Level Bankers' Committee (UTLBC) / District Consultative Committee (DCC) B. Implementation of Resolution Plan by the banks C. Ancillary Measures D. Reporting Requirements
Chapter VII - Government Debt Relief Schemes (DRS) A. Prudential treatment in respect of Government Debt Relief Schemes (DRS):
Chapter VIII - Prudential Treatment of Instruments Acquired as part of Restructuring A. Asset classification of instruments acquired as part of restructuring B. Provisioning in respect of instruments acquired as part of restructuring C. Valuation of instruments acquired as part of restructuring D. Income Recognition from instruments acquired as part of restructuring
Chapter IX - Regulatory Exemptions A. Exemptions from the Reserve Bank Regulations B. Exemptions from Regulations of Securities and Exchange Board of India (SEBI)
Chapter X – Special Measures A. Trade Relief Measures
Chapter XI - Repeal and Other Provisions A. Repeal and saving B. Application of other laws not barred C. Interpretations
Annex
Introduction
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).
Banks 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 banks and accepted by the concerned Government as per the terms of the scheme; mandatory requirement of fresh credit by the banks, etc. These Directions also lay down certain broad principles regarding participation of banks 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 the Sections 21 and 35A of the Banking Regulation Act, 1949, 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 are issued without prejudice to issuance of specific directions, from time to time, by the Reserve Bank to banks, in terms of the provisions of Section 35AA of the Banking Regulation Act, 1949, for initiation of insolvency proceedings against specific borrowers under the Insolvency and Bankruptcy Code, 2016 (IBC).
Chapter I - Preliminary
A. Short title and commencement
These Directions shall be called the Reserve Bank of India (Commercial Banks – Resolution of Stressed Assets) Directions, 2025.
These Directions shall come into force with immediate effect unless specified otherwise.
B. Applicability
For the purpose of these Directions, ‘Commercial Banks’ means banking companies (other than Small Finance Banks, Payment Banks, and Local Area Banks), corresponding new banks, and the State Bank of India, as defined respectively under clauses (c), (da), and (nc) of Section 5 of the Banking Regulation Act, 1949
The instructions contained in Chapter III and Chapter IV shall not be applicable to revival and rehabilitation of Micro, Small, and Medium Enterprises (MSMEs) covered by the instructions contained in Circular No. FIDD.MSME & NFS.BC.No.21/06.02.31/2015-16 dated March 17, 2016, as amended from time to time.
These Directions shall not be applicable for borrower entities in respect of which specific directions have already been issued or are issued by the Reserve Bank to the banks for initiation of insolvency proceedings under the Insolvency and Bankruptcy Code, 2016. A bank shall pursue such cases as per the specific instructions issued to them.
C. Definitions
(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 a bank against the borrower in cash.
Explanation: Compromise settlement may entail some sacrifice of the amount due from the borrower on the part of the bank with corresponding waiver of claims of the bank 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:
1(3A) ‘date of invocation’ for the purpose of Chapter VI-A of these Directions shall mean the date on which the borrower and the bank agree to proceed with a resolution plan through a documented arrangement, other than in case of deemed invocation as specified in paragraph 124N 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.
Provided that for revolving facilities like cash credit, default would also mean, without prejudice to the above, the outstanding balance remaining continuously in excess of the sanctioned limit or drawing power, whichever is lower, for more than thirty days.
(5) ‘interest during construction’ shall mean the interest accrued on debt provided by a bank and capitalised during the construction phase of the project;
(6) ‘lender’, in the context of project finance, shall mean any of the following entities:
(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;
2(8A) ‘natural calamity’ shall mean an event recognized under the National Disaster Response Fund (NDRF) / State Disaster Response Fund (SDRF).
(9) ‘outstanding principal debt’ shall include all credit facilities, including debt / debt like instruments (viz., non-convertible debentures, optionally convertible debentures, optionally convertible preference shares, non-convertible preference shares etc.) that exist post implementation of the resolution plan.
Explanation: Only equity and instruments compulsorily convertible into equity (without any embedded optionality) shall be exempt from determining outstanding principal debt.
(10) ‘residual debt’ shall mean the aggregate outstanding principal debt envisaged to be held by all the specified lenders as per the proposed resolution plan;
(11) ‘resolution plan’ in the context of projects under implementation shall mean a mutually agreed, legally binding, feasible and time-bound plan for resolution of stress in a project finance account. The resolution plan may involve any action / plan / reorganization including, but not limited to, regularisation of the account by payment of all overdue by the debtor entity, sale of the exposures to other entities / investors, change in ownership, extension of DCCO and restructuring.
(12) ‘restructuring’ shall mean an act in which a bank, for economic or legal reasons relating to the borrower’s financial difficulty, grants concessions to the borrower.
Explanation: Restructuring would normally involve modification of terms of the advances / securities, which would generally include, among others, alteration of payment period / payable amount / the amount of instalments / rate of interest; roll over of credit facilities; sanction of additional credit facility/ release of additional funds for an account in default to aid curing of default / enhancement of existing credit limits; compromise settlements where time for payment of settlement amount exceeds three months.
(13) ‘review period’ shall mean a period of thirty days from the date of default or a credit event, as the case may be;
(14) ‘satisfactory performance’ shall mean that the borrower entity is not in default with any specified lender at any point of time during the period concerned;
Provided that in the case of restructuring of MSME accounts where aggregate exposure of Commercial Banks (including SFBs, but excluding PBs, LABs and RRBs) is less than ₹25 crore, satisfactory performance shall mean:
(15) ‘specified lender’ shall mean any of the following entities:
(16) ‘specified period’ shall mean the period from the date of implementation of resolution plan up to the date by which at least 20 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.
Provided that for accounts restructured under IBC, the specified period shall be deemed to commence from the date of implementation of the resolution plan as approved by the Adjudicating Authority.
Provided further that in the case of restructuring of MSME accounts where aggregate exposure of commercial banks (including SFBs, but excluding PBs, LABs and RRBs) is less than ₹25 crore, specified period shall mean a period of one year from the commencement of the first payment of interest or principal, whichever is later, on the credit facility with longest period of moratorium under the terms of restructuring package for a particular bank.
(17) ‘standby credit facility’ shall mean a contingent credit line sanctioned for the project at the time of financial closure to fund any cost overrun during the construction phase of the project.
(18) ‘technical write-off’ shall refer to cases where the non- performing assets remain outstanding at borrowers’ loan account level, but are written-off (fully or partially) by a bank only for accounting purposes, without involving any waiver of claims against the borrower, and without prejudice to the recovery of the same.
The terms ‘Appointed Date, Commercial Real Estate (CRE)’, ‘Commercial Real Estate – Housing (CRE-RH)’, ‘Construction phase’, ‘Date of Financial Closure’, ‘Infrastructure Sector’, ‘Original Date of Commencement of Commercial Operations (Original DCCO)’, ‘Extended DCCO’, ‘Actual DCCO’, ‘Project’, and ‘Project Finance’ shall have the same meaning assigned to them in the Reserve Bank of India (Commercial Banks – Credit Facilities) Directions, 2025.
All other expressions, unless defined herein, shall have the same meaning as have been assigned to them under the Banking Regulation Act, 1949 or the Reserve Bank of India Act, 1934 or the Companies Act, 2013, or any statutory modification or re-enactment thereto or other regulations issued by the Reserve Bank or the Glossary of Terms published by the Reserve Bank or as used in commercial parlance, as the case may be.
