RBI master-direction RBI/DOR/2025-26/312 · 28 Nov 2025
Official title
Reserve Bank of India (Rural Co-operative Banks – Resolution of Stressed Assets) Directions, 2025 (Updated as on July 01, 2026)
Summary
Check the official recordThe Reserve Bank of India establishes a framework for the early recognition, reporting, and resolution of stressed assets in Rural Co-operative Banks. Banks must implement Board-approved policies for restructuring, compromise settlements, and technical write-offs. The Directions mandate the classification of stressed assets into Special Mention Account categories based on overdue periods. The framework includes procedures for resolving accounts impacted by natural calamities and outlines prudential requirements for participating in Government Debt Relief Schemes. These Directions apply to State Co-operative Banks and Central Co-operative Banks. The rules require banks to report compromise settlements and technical write-offs to the next higher authority quarterly. The Directions also specify cooling periods for fresh credit exposures after compromise settlements.
What you must do
Key dates
Who is affected
Thresholds
Exceptions
If you do not comply
RBI/DOR/2025-26/312 DOR.STR.REC.231/21.04.048/2025-26 November 28, 2025
Previous Versions
Reserve Bank of India (Rural Co-operative Banks – Resolution of Stressed Assets) Directions, 2025 [updated as on July 01, 2026]
These Directions are issued with a view to providing a framework for early recognition, reporting and time bound resolution of stressed assets. 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.
Some of the Rural Cooperative Banks (RCBs) 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 read with Section 56 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 shall be called the Reserve Bank of India (Rural Co-operative Banks – Resolution of Stressed Assets) Directions, 2025.
These Directions shall come into force with immediate effect unless specified otherwise.
In this context, rural co-operative banks shall mean State Co-operative Banks and Central Co-operative Banks, as defined in the National Bank for Agriculture and Rural Development Act, 1981.
(1) ‘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.
(1A) ‘date of invocation’ for the purpose of Chapter IV-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 33O of these Directions.
(2) ‘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 30 days.
(2A) ‘natural calamity’ shall mean an event recognized under the National Disaster Response Fund (NDRF) / State Disaster Response Fund (SDRF)
(3) ‘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 the bank only for accounting purposes, without involving any waiver of claims against the borrower, and without prejudice to the recovery of the same.
A bank shall put in place a Board-approved policy for restructuring / rehabilitation of stressed assets.
A bank shall put in place Board-approved policies for undertaking compromise settlements with the borrowers as well as for technical write-offs, which shall inter alia include the following:
(1) comprehensive prescription of the process to be followed for all compromise settlements and technical write-offs, with specific guidance on the necessary conditions precedent such as minimum ageing, deterioration in collateral value etc.;
(2) graded framework for examination of staff accountability in such cases with reasonable thresholds and timelines as may be decided by the Board;
(3) provisions relating to permissible sacrifice for various categories of exposures while arriving at the settlement amount, after prudently reckoning the current realisable value of security/collateral, where available;
(4) methodology for arriving at the realisable value of the security in respect of compromise settlements.
(5) delegation of powers for approval / sanction of compromise settlements and technical write-offs, subject to the following:
(i) delegation of power for such approvals rests with an authority (individual or committee, as the case may be) which is at least one level higher in hierarchy than the authority vested with power to sanction the credit / investment exposure.
Provided that any official who was part of sanctioning the loan (as individual or part of a committee) shall not be part of the approving the proposal for compromise settlement of the same loan account, in any capacity.
(ii) proposals for compromise settlements in respect of borrowers classified as fraud or wilful defaulter, as permitted in terms of paragraphs 17 and 32, shall require approval of the Board in all cases.
8A. The board approved policy of the bank shall incorporate provisions for resolution as provided for under Chapter IV-A of these Directions, including the following:
(1) the objective principles for the terms of relief to be granted to various borrower / loan categories.
(2) the potential relief measures and the verifiable parameters for making such determination.
(3) the delegation matrix for deciding and implementing relief measures (if any), including for restructuring, sanction of additional finance etc., with focus on the timely implementation of relief measures.
