The Reserve Bank of India, through its Second Amendment Directions, 2026, has introduced a significant change to the regulatory framework governing rural cooperative banks’ credit risk management. Exercising powers under the Banking Regulation Act, 1949, the amendment inserts a new Chapter IIA titled “Credit Risk Evaluation.” This provision mandates that banks must incorporate the potential impact of calamities—such as natural disasters or unforeseen adverse events—while conducting credit assessments of borrowers. The change aligns with the broader framework on resolution of stressed assets issued simultaneously, ensuring a more resilient and forward-looking credit evaluation process. By requiring banks to consider borrower vulnerability arising from calamities, the amendment aims to strengthen financial stability, improve risk sensitivity, and promote responsible lending practices in rural cooperative banking. The directions are issued in public interest and will come into force from July 1, 2026, thereby providing banks sufficient time to update their internal risk assessment models and procedures accordingly.
Reserve Bank of India
RBI/2026-27/67
DOR.STR.REC.56/21-04-048/2026-27 | April 29, 2026
Reserve Bank of India (Rural Cooperative Banks – Credit Risk Management) Second Amendment Directions, 2026
Please refer to Reserve Bank of India (Rural Cooperative Banks – Resolution of Stressed Assets) Amendment Directions, 2026 dated April 29, 2026.
2. Consequent to the aforesaid Amendment Directions, in exercise of the powers conferred by the sections 20, 21 and 35A read with the section 56 of the Banking Regulation Act, 1949 and all other laws enabling the Reserve Bank of India (hereinafter called the Reserve Bank) in this regard, the Reserve Bank being satisfied that it is necessary and expedient in the public interest so to do, hereby issues the Amendment Directions hereinafter specified.
3. These Amendment Directions modify the Directions as under:
i. Chapter IIA shall be inserted as under:
Chapter IIA: Credit Risk Evaluation
5A. Credit assessments carried out by a bank shall suitably factor in the possible impact of calamities on borrowers who may be impacted by such events.
4. The above amendment shall come into force with effect from July 1, 2026.
(Vaibhav Chaturvedi)
Chief General Manager
