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

Reserve Bank of India (Non-Banking Financial Companies - Resolution of Stressed Assets) Directions, 2025

28-Nov-2025 | RBI/DOR/2025-26/357 DOR.STR.REC.276/21.04.048/2025-26

RBI has issued Reserve Bank of India (Non-Banking Financial Companies - Resolution of Stressed Assets) Directions, 2025, effective from 28th Nov 2025. Applicability -These Directions shall be applicable to Non-Banking Finance Companies for all layers unless specified otherwise. Key Highlights: - NBFCs must adopt a Board-approved stressed asset resolution policy covering identification and monitoring, pre-resolution actions, evaluation of borrower viability and escalation mechanisms. - An NBFC shall recognise incipient stress in loan accounts, immediately on default, by classifying such assets as special mention accounts (SMA). - An NBFC shall make suitable disclosures in its financial statements in the 'Notes to Accounts', as specified in the Reserve Bank of India (Non-Banking Financial Companies - Financial Statements- Presentation and Disclosures) Directions, 2025. - Timelines for Resolution - For borrower entities with exposure Rupees 5 crore, NBFCs must formulate the RP within 180 days from the default date, If the RP involves restructuring, NBFCs must implement it within 180 days of invocation, and Invocation requires consent from lenders holding 75% by value and 60% by number. - NBFCs must maintain 5% additional provisioning if the RP is not implemented within the timeline and Higher provisioning for repeated restructurings or non-compliance with prescribed conditions. - NBFCs must conduct periodic monitoring (quarterly or more frequently, depending on exposure), track cash flows, performance covenants, and financial ratios and reclassify accounts as NPA if performance deteriorates. For more information, kindly refer to the attached document.

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