The Reserve Bank of India (RBI) has issued the Commercial Banks – Income Recognition, Asset Classification and Provisioning (IRACP) Amendment Directions, 2025, modifying the existing 2025 Directions. The amendment follows the earlier issuance of the Concentration Risk Management Amendment Directions, 2025, and is issued under sections 21 and 35A of the Banking Regulation Act, 1949. The key change pertains to Paragraph 117 under Chapter IV – Provisioning Norms, which has been deleted. As a result, banks are now permitted to reverse provisions previously made or transfer them to the General Reserve. This amendment aims to provide flexibility to banks in managing their provisioning practices while maintaining financial prudence. The revised framework will be effective from January 1, 2026. The RBI has emphasized that this modification is in the public interest, ensuring that banks can optimize capital management while adhering to regulatory standards, aligning income recognition and asset classification practices with evolving banking sector requirements.
RESERVE BANK OF INDIA
RBI/2025-26/128
DOR.STR.REC.336/21-04-048/2025-26 | Dated: December 4, 2025
Reserve Bank of India (Commercial Banks – Income Recognition, Asset Classification and Provisioning) Amendment Directions, 2025
Please refer to Reserve Bank of India (Commercial Banks – Income Recognition, Asset Classification and Provisioning) Directions, 2025 (hereinafter referred to as ‘the Directions’).
2. On a review, consequent to the issuance of Reserve Bank of India (Commercial Banks – Concentration Risk Management) Amendment Directions, 2025, and 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. The Amendment Directions modifies the Directions as under:
Paragraph 117 under ‘Chapter IV – Provisioning Norms’ shall stand deleted.
4. Pursuant to the above, a bank shall be free to reverse the released provisions or transfer the same to General Reserve.
5. The above amendment shall come into force from January 1, 2026.
(Vaibhav Chaturvedi)
Chief General Manager
