What changed
- New sub-paragraphs (7) to (10) have been inserted in paragraph 10 of the Directions.
- Paragraphs 48(2), 54, 63, 67, 72, 73, 77(5), 96 (explanation), 103, 119(2), 120, and 124 of the Directions have been modified.
- Paragraph 162 of the Directions has been deleted.
What it means for you
- The amendments update references to the new Reserve Bank of India (Commercial Banks – Asset Classification, Provisioning and Income Recognition) Directions, 2026 across multiple paragraphs.
- New sub-paragraphs (7) to (10) in paragraph 10 specify additional indicators of stress, including significant credit rating downgrades, changes in collateral value, delays in fee payment, and expected changes in loan documentation.
What you must do
- Review and update asset classification and provisioning policies to reflect the amended Directions.
- Ensure compliance with the amended Directions and the Reserve Bank of India (Commercial Banks – Asset Classification, Provisioning and Income Recognition) Directions, 2026.
Who it affects
Commercial banks
What are the new criteria for asset classification?
Significant downgrades in credit ratings, changes in collateral values, and other factors such as delay in payment of fees and expected changes in loan documentation.
How will provisioning requirements be affected?
Banks will have to follow the Reserve Bank of India (Commercial Banks – Asset Classification, Provisioning and Income Recognition) Directions, 2026.
What is the impact on farm credit?
The explanation to paragraph 96 has been modified to include a specific definition of farm credit, which refers to credit extended to agricultural activities as listed in the Reserve Bank of India (Commercial Banks – Asset Classification, Provisioning and Income Recognition) Directions, 2026.