The Reserve Bank of India (RBI) on November 28, 2025, issued the Reserve Bank of India (Local Area Banks – Income Recognition, Asset Classification and Provisioning pertaining to Advances) Directions, 2025.
The following has been stated: -
•The RBI (Local Area Banks – Income Recognition, Asset Classification and Provisioning) Directions, 2025, set out prudential norms for local area banks to ensure consistent and transparent accounting of advances.
•Banks must classify assets as standard or non-performing (substandard, doubtful, loss) based on objective criteria, with borrower-wise assessment.
•Provisioning norms require banks to maintain specified general and incremental provisions for standard, substandard, and stressed assets, considering security and exposure risks.
•The directions also mandate board-approved policies, early warning systems, borrower education, and regular disclosures to strengthen credit risk management and asset quality.
•These directions shall become effective on November 28, 2025.
[Notification No.: RBI/DOR/2025-26/238 DOR.STR.REC.157./21.04.048 /2025-26]
