RBI master-direction RBI/DOR/2025-26/287 · 28 Nov 2025
Official title
Reserve Bank of India (Urban Co-operative Banks – Resolution of Stressed Assets) Directions, 2025 (Updated as on July 1, 2026)
Summary
Check the official recordThese Directions establish a framework for Urban Co-operative Banks (UCBs) to resolve stressed assets. UCBs must implement Board-approved policies for restructuring, compromise settlements, and technical write-offs. The Directions mandate early stress identification through Special Mention Account (SMA) categories and reporting to the Central Repository of Information on Large Credits (CRILC) for exposures of ₹5 crore and above. The framework details prudential norms for restructuring, including asset classification, income recognition, and provisioning requirements. It also provides specific procedures for project finance resolution, including inter-creditor agreements and DCCO deferment limits. Additionally, the Directions outline protocols for participating in Government Debt Relief Schemes and resolving accounts impacted by natural calamities. These rules apply to all UCBs with immediate effect.
What you must do
Key dates
Who is affected
Thresholds
Exceptions
If you do not comply
RBI/DOR/2025-26/287 DOR.STR.REC.206/21.04.048/2025-26 November 28, 2025
Previous Versions
Reserve Bank of India (Urban Co-operative Banks – Resolution of Stressed Assets) Directions, 2025 (updated as on July 1, 2026)
These Directions are issued with a view to providing a consolidated framework for 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. 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).
Some of the Urban Cooperative Banks (UCBs) 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 UCBs and accepted by the concerned Government as per the terms of the scheme; mandatory requirement of fresh credit by the UCBs, etc. These Directions also lay down certain broad principles regarding participation of UCBs 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 (Urban Co-operative Banks – Resolution of Stressed Assets) Directions, 2025.
These Directions shall come into force with immediate effect unless specified otherwise.
In this context, urban co-operative banks shall mean Primary Co-operative Banks as defined under section 5(ccv) read with Section 56 of Banking Regulation Act, 1949.
(1) ‘advances’ shall mean all kinds of credit facilities including cash credit, overdrafts, term loans, bills discounted / purchased, receivables, etc. and investments other than that in the nature of equity.
(2) ‘aggregate exposure’ shall include all fund based and non-fund based exposure, including investment exposure;
(3) ‘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.
(4) ‘credit event’ in the context of projects under implementation shall be deemed to have been triggered on the occurrence of any of the following:
(i) default with any lender; (ii) one or more lenders determine a need for extension of the original / extended Date of Commencement of Commercial Operations (DCCO), as the case may be, of a project; (iii) expiry of original / extended DCCO, as the case may be; (iv) one or more lenders determine a need for infusion of additional debt; (v) the project is faced with financial difficulty
Explanation: For the purposes of this direction, financial difficulty would have the same meaning as specified in the Reserve Bank of India (Commercial Banks – Resolution of Stressed Assets) Directions, 2025.
(4A) ‘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 99J of these Directions.
(5) ‘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.
(6) ‘fully secured’ shall mean dues to a bank when the amounts due (present value of principal and interest receivable as per restructured loan terms) are fully covered by the value of security, duly charged in its favour in respect of those dues.
Explanation: While assessing the realisable value of security, primary as well as collateral securities would be reckoned, provided such securities are tangible securities and are not in intangible form like guarantee etc., of the promoter / others. However, for this purpose the bank guarantees, State Government Guarantees and Central Government Guarantees will be treated on par with tangible security.
(7) ‘interest during construction’ shall mean the interest accrued on debt provided by a UCB and capitalised during the construction phase of the project;
(8) ‘lender’, in the context of project Finance directions, shall mean any of the following entities:
(i) a Commercial Bank (including Small Finance Banks (SFBs) but excluding Payments Banks (PBs), Local Area Banks (LABs) and Regional Rural Banks (RRBs)); (ii) a Non-Banking Financial Company (NBFC (including a Housing Finance Company (HFC)); (iii) a Primary (Urban) Cooperative Bank; (iv) an All India Financial Institution.
(9) ‘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;
(9A) ‘natural calamity’ shall mean an event recognized under the National Disaster Response Fund (NDRF) / State Disaster Response Fund (SDRF);
(10) ‘repeatedly restructured account’ shall mean an account that is restructured a second (or more) time(s) by the bank;
Provided that if the second restructuring takes place after the period up to which the concessions were extended under the terms of the first restructuring, that account shall not be reckoned as a repeatedly restructured account.
(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 overdues by the debtor entity, sale of the exposures to other entities / investors, change in ownership, extension of DCCO and restructuring.
