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Corporate Laws Central Ministry of Finance Reserve Bank of India Act, 1934

Reserve Bank of India (Non-Banking Financial Companies - Income Recognition, Asset Classification and Provisioning) Directions, 2025

28-Nov-2025 | RBI/DOR/2025-26/356 DOR.STR.REC.No.275/21.04.048/2025-26

RBI has issued Reserve Bank of India (Non-Banking Financial Companies - Income Recognition, Asset Classification and Provisioning) Directions, 2025, effective from 28th Nov, 2025.

Applicability - The Directions apply to NBFC-D, NBFC-ICC, NBFC-Factor, NBFC-IFC, IDF-NBFC, Housing Finance Companies (HFCs), NBFC-MFIs, Mortgage Guarantee Companies (MGCs) and Core Investment Companies (CICs).

Key Highlights:
- NBFCs must clearly disclose repayment schedules, due dates, SMA/NPA triggers in loan agreements, align existing old loans with these requirements upon renewal, provide borrower education through website disclosures, branch displays, and frontline officer guidance, Tag overdue accounts strictly based on day-end processes, ensuring uniformity in SMA/NPA dates.
- All NBFCs must classify assets into Standard, Sub-standard, Doubtful or Loss.
- Provisioning Requirements: Provisioning depends on asset class, NBFC layer, and asset type.
- General Provisions:
a. Standard asset provisions must be shown separately and not netted off loans.
b. For Ind AS NBFCs, prudential floor provisioning applies; shortfall is transferred to an Impairment Reserve, which cannot be withdrawn without RBI approval.
- Hire Purchase and Lease Assets:
a. Several graded provisioning slabs based on overdue period (from 0% to 100%).
b. Full provisioning required if 12 months pass beyond the last instalment date.

For more information, kindly refer to the attached document.

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