The Reserve Bank of India (RBI) on November 28, 2025, issued the Reserve Bank of India (Local Area Banks – Resolution of Stressed Assets) Directions, 2025.
The following has been stated: -
•The RBI (Local Area Banks – Resolution of Stressed Assets) Directions, 2025, provide a framework for early identification, reporting, and time-bound resolution of stressed assets.
•Local area banks (LABs) must implement board-approved policies for compromise settlements and technical write-offs, ensuring proper delegation, accountability, and valuation of collateral.
•Restructured assets remain substandard for at least one year, and wilful defaulters are generally ineligible for restructuring until delisted.
•The directions also mandate reporting, disclosure, and cooling periods for borrowers before fresh lending, with special provisions for farm credit exposures.
These directions shall become effective on November 28, 2025.
[Notification No.: RBI/DOR/2025-26/239 DOR.STR.REC.158/21.04.048 /2025-26]
