The Reserve Bank of India (RBI), on November 28, 2025, issued the Reserve Bank of India (Commercial Banks – Resolution of Stressed Assets) Directions, 2025 to create a unified, time-bound and transparent framework for early recognition, reporting, and resolution of stressed assets in the banking system. The Directions consolidate and harmonise rules relating to restructuring, compromise settlements, technical write-offs, DCCO changes for project loans, and prudential treatment of Government Debt Relief Schemes (DRS), while ensuring alignment with the Insolvency and Bankruptcy Code (IBC), 2016.
These Directions mandate banks to adopt board-approved policies for stress identification and resolution, ensure early detection through periodic borrower-level reviews, and comply with inter-creditor agreement requirements for joint lenders. The framework sets out norms on resolution plans (including restructuring, change in ownership, compromise settlements, refinancing, and special situations like natural calamities and sale-and-leaseback), along with conditions for satisfactory performance and asset-classification upgrades. It also prescribes additional provisioning for delayed implementation, prudential rules for additional finance, post-restructuring income recognition, and treatment of DRS to mitigate moral hazard and ensure credit discipline. Certain debtor categories—MSMEs under a separate revival framework and borrowers directed to IBC under Section 35AA—fall outside the scope of these Directions.
The framework further standardises regulatory treatment of instruments acquired during restructuring, including valuation, provisioning, and income recognition, and lists specific regulatory exemptions applicable during resolution.
[Notification No. RBI/DOR/2025-26/165]
