The Reserve Bank of India, through its 2026 Second Amendment Directions for Small Finance Banks on Credit Risk Management, has introduced a targeted regulatory enhancement aimed at strengthening lending prudence. The amendment inserts a new provision (Paragraph 12A) requiring banks to incorporate the potential impact of calamities on borrowers while conducting credit assessments. This change aligns with the broader stressed asset resolution framework notified on April 29, 2026, and reflects a shift toward more forward-looking and risk-sensitive credit appraisal systems. By mandating explicit consideration of disaster-related vulnerabilities, the RBI seeks to ensure that banks better evaluate repayment capacity under adverse conditions, thereby reducing future asset quality deterioration. The amendment promotes resilience in the small finance banking sector while balancing financial inclusion objectives with prudent risk management. These revised directions will come into effect from July 1, 2026.
Reserve Bank of India
RBI/2026-27/51
DOR.STR.REC.40/21-04-048/2026-27 | Dated: April 29, 2026
Reserve Bank of India (Small Finance Banks – Credit Risk Management) Second Amendment Directions, 2026
Please refer to Reserve Bank of India (Small Finance 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 21 and 35A 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. Paragraph 12A shall be inserted as under:
12A. 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
