The Reserve Bank of India (RBI) on November 28, 2025, issued the Reserve Bank of India (All India Financial Institutions – Income Recognition, Asset Classification and Provisioning) Directions, 2025.
The following has been stated namely: -
• It prescribes prudential norms for income recognition, asset classification, and provisioning (IRACP) for advances, requiring that income be recognised only when it is realisable and assets classified based on objective criteria.
• The norms categorise non-performing assets (NPAs) into sub-standard, doubtful, and loss assets, and mandate specific provisioning levels for each category, as well as for standard assets with elevated risk.
• They also impose requirements on reversal of accrued income when advances become NPAs and emphasise that provisioning shall be treated as an expense in the period in which it is recognised.
• Furthermore, the guidelines cover the classification of assets under implementation involving time overruns, and provide detailed disclosures and reporting mechanisms for banks and financial institutions.
• This shall come into force from November 28, 2025.
[Notification no. - RBI/ DOR/ 2025-26/331 DOR.STR.REC.No.250/21.04.048 /2025-26]
