RBI notification RBI/2026-27/49 · 29 Apr 2026
Official title
Reserve Bank of India (Small Finance Banks – Income Recognition, Asset Classification and Provisioning) Amendment Directions, 2026
Summary
Check the official recordThe Reserve Bank of India amends the Income Recognition, Asset Classification and Provisioning Directions for Small Finance Banks. The update introduces asset classification rules for borrower accounts under resolution plans implemented per Chapter VI-A of the 2025 Resolution of Stressed Assets Directions. Banks must maintain additional specific provisions of five percent of outstanding debt for these accounts. The amendment defines conditions for writing back these provisions based on debt repayment or facility type. Furthermore, the update specifies interest income recognition methods for restructured accounts, requiring accrual or cash basis depending on the restructuring type. These changes apply to Small Finance Banks and take effect on July 1, 2026.
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RBI/2026-27/49 DOR.STR.REC.38/21-04-048/2026-27 April 29, 2026
Reserve Bank of India (Small Finance Banks – Income Recognition, Asset Classification and Provisioning) Amendment Directions, 2026
Please refer to Reserve Bank of India (Small Finance Banks – Resolution of Stressed Assets) Amendment Directions, 2026 dated April 29, 2026.
Consequent to the aforesaid Amendment Directions, in exercise of the powers conferred by the sections 21 and 35A of the Banking Regulation Act, 1949 and all other laws enabling the Reserve Bank of India (hereinafter called 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 modify the Directions as under:
i. Paragraph 53(4) shall be deleted.
ii. Paragraph 58A and 58B shall be inserted as under:
58A. If a resolution plan is implemented in adherence to the provisions of Chapter VI-A of Reserve Bank of India (Small Finance Banks – Resolution of Stressed Assets) Directions, 2025 dated November 28, 2025, borrower accounts which are classified as 'Standard' may be retained as such upon implementation. Borrower accounts which may have slipped into NPA between the date of occurrence of the natural calamity and implementation of the resolution plan, shall be upgraded as 'Standard', upon implementation of the resolution plan.
Provided that after implementation of the resolution plan, the subsequent asset classification shall be governed by the criteria laid out in these Directions.
58B. Accounts which are restructured under paragraph 124I to 124Q of the Reserve Bank of India (Small Finance Banks – Resolution of Stressed Assets) Directions, 2025 dated November 28, 2025, where a subsequent restructuring is necessitated under the provisions of Chapter VI-A of the aforesaid Directions, shall continue to be classified as 'Standard'.
iii. Para 76(6) shall be deleted
iv. The following shall be inserted in Chapter IV - Provisioning Norms
B1. Additional specific provisioning in case of resolution plan implemented under Chapter VI-A of the Reserve Bank of India (Small Finance Banks – Resolution of Stressed Assets) Directions, 2025
80A. A bank shall make an additional specific provision of five percent of the outstanding debt in respect of borrowers, for whom a resolution plan has been implemented in terms of Chapter VI-A of the Reserve Bank of India (Small Finance Banks – Resolution of Stressed Assets) Directions, 2025. The additional specific provisions shall be over and above the applicable prudential provisions subject to a ceiling of hundred per cent.
80B. For accounts where repeated restructuring is necessitated in terms of Chapter VIA of the Reserve Bank of India (Small Finance Banks – Resolution of Stressed Assets) Directions, 2025, a bank shall make additional specific provisioning of five per cent of the outstanding debt for each instance of restructuring made under the aforesaid Directions. This additional specific provisioning shall be over and above the applicable prudential provisions subject to a ceiling of hundred per cent.
80C. The additional specific provisions maintained in terms of paragraph 80A and 80B above may be written back upon the borrower paying at least 20% of the outstanding debt with the bank, without slipping into NPA post implementation of the restructuring, and without being subjected to another restructuring.
80D. If the outstanding debt post-restructuring is only in the form of non-fund-based facilities or facilities in the nature of cash credit / overdraft, the additional specific provisions made in terms of paragraph 80A and 80B above can be reversed after one year, post implementation of the restructuring, provided the borrower was not in default at any point of time during the period concerned. In case the borrower defaults during the above period, the conditions for reversal of additional specific provisions, mentioned above, shall be tested from the date of rectification of default.
v. The following shall be inserted in part E, Chapter V – Income Recognition:
133A. Interest income recognition in respect of borrower accounts where resolution plan has been implemented in terms of Chapter VI-A of the Reserve Bank of India (Small Finance Banks – Resolution of Stressed Assets) Directions, 2025 dated November 28, 2025, shall be on accrual basis.
133B. For accounts specified at paragraph 58B of these Directions, interest income shall be recognized on cash basis.
(Vaibhav Chaturvedi)
Chief General Manager
