Reserve Bank of India (Rural Co-operative Banks – Income Recognition, Asset Classification and Provisioning) Third Amendment Directions, 2026
RBI notification RBI/2026-27/200 · 16 Jul 2026
RBI notification RBI/2026-27/200 · 16 Jul 2026
Summary
Check the official recordThe Reserve Bank of India amends the Income Recognition, Asset Classification and Provisioning Directions for Rural Co-operative Banks. The amendment adds rules for Specified Non-Financial Assets (SNFA). Banks must not recognize accrued but unrealized interest from extinguished exposures as income upon SNFA acquisition. Banks must reverse any such income recognized on SNFA outstanding as of September 30, 2026, through the Profit and Loss account by September 30, 2027. Banks must recognize income from SNFA as non-interest or other income in the year of realization. Banks must account for SNFA upkeep expenses in the year of incurrence. These changes take effect on October 1, 2026.
What you must do
Key dates
Who is affected
RBI/2026-27/200 DOR.STR.REC.165/21-04-048/2026-27 July 16, 2026
Reserve Bank of India (Rural Co-operative Banks – Income Recognition, Asset Classification and Provisioning) Third Amendment Directions, 2026
Please refer to Reserve Bank of India (Rural Co-operative Banks – Resolution of Stressed Assets) Second Amendment Directions, 2026 dated July 16, 2026.
Consequent to the aforesaid Amendment Directions, in, in exercise of the powers conferred by the sections 21, 35A and 56 of the Banking Regulation Act, 1949 and all other laws enabling 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 modifies the Directions as under:
(i) The following shall be inserted in Chapter V – Income Recognition:
“A1. Income Recognition in case of acquisition of Specified Non-Financial Assets (SNFA)
62C. Any accrued but unrealised interest and / or charges from the extinguished exposure pertaining to periods prior to acquisition of an 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 bank 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.
62D. 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