The Reserve Bank of India issued the “Commercial Banks – Transfer and Distribution of Credit Risk (Amendment) Directions, 2026” to refine the regulatory framework governing loan transfers and risk distribution. Effective from April 1, 2027, the amendments align loan recognition, measurement, and provisioning with the updated Asset Classification, Provisioning and Income Recognition (IRACP) Directions, 2026. A new provision mandates that acquired loans be recognized and measured under the IRACP framework, ensuring consistency across banks. Stressed loans acquired by banks are now classified as Purchased or Originated Credit-Impaired (POCI) assets, with corresponding provisioning and disclosure requirements. Certain earlier provisions have been removed to streamline regulations. Additionally, where stressed loans are transferred to Asset Reconstruction Companies (ARCs) at prices below net book value, the shortfall must be charged to the profit and loss account in the year of transfer. These changes aim to enhance transparency, consistency, and prudential risk management in credit markets.
Reserve Bank of India
RBI/2026-27/24
DOR.STR.REC.17/21-04-048/2026-27 | Dated: April 27, 2026
Reserve Bank of India (Commercial Banks – Transfer and Distribution of Credit Risk) Amendment Directions, 2026
Please refer to Reserve Bank of India (Commercial Banks – Transfer and Distribution of Credit Risk) Directions, 2025 (hereinafter referred to as ‘the Directions’).
2. On a review, and in exercise of the powers conferred by the section 21 and 35A of the Banking Regulation Act, 1949, 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 modify the Directions as under:
(1) Paragraph 52A shall be inserted as specified below:
“52A. For permitted transferees, the initial recognition as well as subsequent measurement of acquired loans will be as per Reserve Bank of India (Commercial Banks – Asset Classification, Provisioning and Income Recognition) Directions, 2026.”
(2) Paragraph 53 shall stand deleted.
(3) Para 70A of the Directions shall be inserted as below:
“70A. The stressed loan acquired by banks shall be classified as purchased or originated credit-impaired financial asset (POCI) and shall be guided by POCI related guidelines contained in the Reserve Bank of India (Commercial Banks – Asset Classification, Provisioning and Income Recognition) Directions, 2026 for the purpose of provisioning, initial recognition, subsequent measurement and relevant disclosures.”
(4) Para 73 shall stand deleted.
(5) Para 81 of the Directions shall be modified as below:
“81. When the stressed loan is transferred to ARC at a price below the NBV at the time of transfer, bank shall debit the shortfall to the profit and loss account for the year in which the transfer has taken place.”
4. The above amendments shall come into force from April 01, 2027.
(Vaibhav Chaturvedi)
Chief General Manager
