What changed
RBI issued a new master circular (DOR.No.STR.REC.55/21.04.048/2021-22) that consolidates all previous instructions on IRAC norms for advances, superseding the July 1, 2015 master circular. The circular lists all consolidated circulars in Annex 6 and covers definitions, income recognition, asset classification, provisioning norms, and stressed asset resolution frameworks.
What it means for you
Banks now have a single, updated reference document for all IRAC norms, reducing the need to track multiple circulars. This consolidation ensures uniformity in asset classification and provisioning practices, which is critical for accurate NPA reporting and capital adequacy. Lenders must align their internal policies with this master circular to avoid regulatory gaps.
What you must do
- Review and update your bank's IRAC policies to align with this master circular.
- Ensure all staff involved in credit and risk management are trained on the consolidated norms.
- Verify that your NPA identification and provisioning systems reflect the latest definitions and thresholds.
- Maintain a copy of this circular and its annexes for audit and regulatory reference.
Who it affects
All commercial banks (excluding Regional Rural Banks), Credit risk and NPA management teams, Internal audit and compliance departments, Loan officers and relationship managers
Does this master circular introduce new IRAC norms?
No, it consolidates existing instructions issued as of October 1, 2021, without introducing new norms. It replaces the July 2015 master circular.
Which banks are covered by this circular?
All commercial banks except Regional Rural Banks (RRBs) are covered.
Where can I find the list of circulars consolidated in this master circular?
The list is provided in Annex 6 of the circular.