The Reserve Bank of India, through the Reserve Bank of India (Commercial Banks – Income Recognition, Asset Classification and Provisioning) Second Amendment Directions, 2026 dated 16 July 2026, amended the income recognition provisions following the Reserve Bank of India (Commercial Banks – Resolution of Stressed Assets) Third Amendment Directions, 2026. The amendment inserts a new section on income recognition for acquisition of Specified Non-Financial Assets (SNFAs). It provides that any accrued but unrealised interest or charges relating to the extinguished exposure for periods before acquisition of an SNFA shall not be recognised as income upon acquisition. Where such income has been recognised in respect of any SNFA outstanding in the books of a bank as on 30 September 2026, it shall be reversed through the Profit and Loss account by 30 September 2027 to the extent it remains unrealised on that date. The amendment also provides that income received from an SNFA shall be recognised as non-interest/other income in the financial year in which it is realised, while expenses incurred towards upkeep of an SNFA shall be recognised in the income statement in the financial year in which they are incurred. The amendment comes into force on 1 October 2026.
Reserve Bank of India
RBI/2026-27/195DOR.STR.REC.160/21-04-048/2026-27 | Dated: July 16, 2026
Reserve Bank of India (Commercial Banks – Income Recognition, Asset Classification and Provisioning) Second Amendment Directions, 2026
Please refer to Reserve Bank of India (Commercial Banks – Resolution of Stressed Assets) Third Amendment Directions, 2026 dated July 16, 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 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) The following shall be inserted in Chapter V – Income Recognition:
“E1. Income Recognition in case of acquisition of Specified Non-Financial Assets (SNFA)
139C. Any accrued but unrealised interest and / or charges from the extinguished exposure pertaining to periods prior to acquisition of an SNFA, shall not be recognised as income upon acquisition of the SNFA. Where such income has been recognised in respect of any SNFA outstanding in the books of a bank as on September 30, 2026, it shall be reversed through Profit and Loss account, latest by September 30, 2027, to the extent remaining unrealised as on that date.
139D. Any income received from an SNFA shall be recognised in the income statement as ‘non-interest / other income’, in the financial year in which it is realised. Similarly, any expense incurred towards upkeep of an SNFA shall be accounted for in the income statement in the financial year in which it is incurred.”.
4. The above amendment would come into force with effect from October 01, 2026.
(Vaibhav Chaturvedi)Chief General Manager
