RBI Update - Reserve Bank of India (Non-Banking Financial Companies – Income Recognition, Asset Classification and Provisioning) Amendment, 2026

The Reserve Bank of India (Non-Banking Financial Companies – Income Recognition, Asset Classification and Provisioning) Amendment Directions, 2026, issued by the Reserve Bank of India, introduce key prudential and accounting changes aligned with the Resolution of Stressed Assets Amendment Directions, 2026 dated April 29, 2026. The amendment inserts Paragraphs 27A and 27B to allow borrower accounts impacted by calamities and restructured under Chapter VI-A to retain or regain ‘Standard’ classification upon implementation of a resolution plan, including upgrading accounts that slipped into NPA during the interim period, while ensuring future classification follows existing norms. Additionally, new provisioning requirements (Paragraphs 36D to 36F) mandate NBFCs to maintain an extra 5% provision on outstanding debt for accounts under such resolution plans, with incremental provisioning for repeated restructuring, subject to a 100% cap, and allow write-back upon satisfactory repayment performance. Further, income recognition norms (Paragraphs 40A and 40B) provide for accrual-based interest recognition for standard restructured accounts, but require cash basis recognition in cases of repeated restructuring. These amendments will come into effect from July 1, 2026.