RBI master-direction RBI/DOR/2025-26/356 · 28 Nov 2025
Official title
Reserve Bank of India (Non-Banking Financial Companies – Income Recognition, Asset Classification and Provisioning) Directions, 2025 (updated as on July 01, 2026)
Summary
Check the official recordThe Reserve Bank of India establishes prudential norms for income recognition, asset classification, and provisioning for Non-Banking Financial Companies. These directions apply to NBFC-D, NBFC-ICC, NBFC-Factor, NBFC-IFC, and IDF-NBFC. NBFCs must classify assets as standard, sub-standard, doubtful, or loss assets based on credit risk. NBFCs must flag borrower accounts as overdue during day-end processes. NBFCs must maintain specific provisioning for sub-standard, doubtful, and loss assets. NBFCs must also follow specific provisioning rates for project finance and liquidity facilities. NBFCs complying with Indian Accounting Standards must maintain these prudential norms as a floor for provisioning. These directions repeal previous guidelines on the subject.
What you must do
Key dates
Who is affected
Thresholds
Exceptions
If you do not comply
RBI/DOR/2025-26/356 DOR.STR.REC.No.275/21.04.048/2025-26 November 28, 2025
Previous Versions
Reserve Bank of India (Non-Banking Financial Companies – Income Recognition, Asset Classification and Provisioning) Directions, 2025 (Updated as on July 01, 2026)
Reserve Bank of India ('Reserve Bank') is statutorily mandated to operate the credit system of the country to its advantage. In line with the international practices and as per the recommendations made by the Committee on the Financial System (Chairman Shri M. Narasimham), the Reserve Bank has introduced, in a phased manner, prudential norms for income recognition, asset classification and provisioning for the advances portfolio of NBFCs so as to move towards greater consistency and transparency in the published accounts.
In exercise of powers conferred by Sections 45JA, 45L and 45M of the Reserve Bank of India Act, 1934, and Section 6 of the Factoring Regulation Act, 2011, the Reserve Bank being satisfied that it is necessary and expedient in the public interest so to do, hereby issues these Directions hereinafter specified.
These Directions shall be called the Reserve Bank of India (Non-Banking Financial Companies – Income Recognition, Asset Classification and Provisioning) Directions, 2025.
These Directions shall come into force with immediate effect.
(1) NBFC-D registered with the RBI under the provisions of the RBI Act, 1934;
(2) NBFC-ICC registered with the RBI under the provisions of the RBI Act, 1934;
(3) NBFC-Factor registered with the RBI under the provisions of the Factoring Regulation Act, 2011;
(4) NBFC-IFC registered with the RBI under the provisions of the RBI Act, 1934;
(5) IDF-NBFC registered with the RBI under the provisions of the RBI Act, 1934;
The provisions of these directions shall apply to Housing Finance Company registered with the RBI under NHB Act, 1987; unless the provisions of these directions are not consistent with the Reserve Bank of India (Housing Finance Company) Directions, 2025. The instructions contained in the Reserve Bank of India (Housing Finance Company) Directions, 2025 shall prevail in the event of conflict, if any, with these Directions.
The provisions of these directions shall apply to NBFC-Micro Finance Institution registered with the RBI under RBI Act, 1934; unless the provisions of these directions are not consistent with the Reserve Bank of India (Non-Banking Financial Companies – Microfinance Institution) Directions, 2025. The instructions contained in the Reserve Bank of India (Non-Banking Financial Companies – Microfinance Institution) Directions, 2025 shall prevail in the event of conflict, if any, with these Directions, with these Directions.
The provisions of these directions shall apply to Mortgage Guarantee Company registered with the RBI under RBI Act, 1934; unless the provisions of these directions are not consistent with the Reserve Bank of India (Mortgage Guarantee Companies) Directions, 2025. The instructions contained in the Reserve Bank of India (Mortgage Guarantee Companies) Directions, 2025 shall prevail in the event of conflict, if any, with these Directions.
The provisions of these directions shall apply to Core Investment Company registered with the RBI under RBI Act, 1934; unless the provisions of these directions are not consistent with the Reserve Bank of India (Core Investment Companies) Directions, 2025. The instructions contained in the Reserve Bank of India (Core Investment Companies) Directions, 2025 shall prevail in the event of conflict, if any, with these Directions.
An NBFC which is required to comply with Indian Accounting Standards (Ind AS) shall continue to be guided by the Standards and the advisories issued by the Institute of Chartered Accountants of India (ICAI Advisories) in case of any inconsistencies between these Directions and the Standards.
An NBFC shall also follow the prudential guidelines on income recognition, asset classification and provisioning of advances for restructured accounts as prescribed in the Reserve Bank of India (Non-Banking Financial Companies – Resolution of Stressed Assets) Directions, 2025, in addition to these Directions.
These Directions are not applicable for the following:
(1) NBFC-P2P registered with the RBI under the provisions of the RBI Act, 1934;
(2) NBFC-AA registered with the RBI under the provisions of the RBI Act, 1934;
(3) SPD registered with the RBI as NBFCs under the provisions of the RBI Act, 1934;
(4) NOFHC registered with the RBI as NBFC under the provisions of the RBI Act, 1934;
(5) 1[NBFC holding Certificate of Registration as ‘Type I NBFC’];
(6) 'NBFCs-BL having customer interface but not availing public funds'.
Note: The applicability under these Directions is in line with the regulatory structure for NBFCs as set out in the Reserve Bank of India (Non-Banking Financial Companies – Registration, Exemptions and Framework for Scale Based Regulation) Directions, 2025.
(1) 'loss asset' shall mean either of the following:
(i) an asset which has been identified as loss asset by the NBFC or its internal or external auditor or by the Reserve Bank during the inspection of the applicable NBFC, to the extent it is not written off by the applicable NBFC;
(ii) an asset which is adversely affected by a potential threat of non-recoverability due to either erosion in the value of security or non-availability of security or due to any fraudulent act or omission on the part of the borrower.
(2) 'overdue' status – any amount due to a NBFC under any credit facility shall be treated as 'overdue' if it is not paid on the due date fixed by the NBFC.
(3) 'standard asset' shall mean the asset in respect of which, no default in repayment of principal or payment of interest is perceived and which does not disclose any problem or carry more than normal risk attached to the business.
(4) 'wilful defaulter' shall mean the same as defined under the Reserve Bank of India (Non-Banking Financial Companies – Treatment of Wilful Defaulters and Large Defaulters) Directions, 2025.
The definitions of the terms 'Micro Enterprises', 'Small Enterprises', and 'Medium Enterprises' shall be in terms of the circular FIDD.MSME & NFS.BC.No.3/06.02.31/2020-21 dated July 2, 2020 on 'Credit flow to Micro, Small and Medium Enterprises Sector' as updated from time to time.
The terms 'Commercial Real Estate (CRE)', 'Commercial Real Estate – Residential Housing Sector (CRE - RH)', 'project finance', and 'financial closure' shall have the same meaning assigned to them in the Reserve Bank of India (Non-Banking Financial Companies – 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.
