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

Reserve Bank of India (Urban Co-operative Banks - Income Recognition, Asset Classification and Provisioning) Directions, 2025

28-Nov-2025 | RBI/DOR/2025-26/286 DOR.STR.REC.205./21.04.048/2025-26

RBI has issued RBI (Urban Co-operative Banks - Income Recognition, Asset Classification and Provisioning) Directions, 2025 effective from 28th November 2025.

Key Highlights:
1. Applicability - All Urban Co-operative Banks (UCBs), meaning Primary Co-operative Banks as defined under the Banking Regulation Act.
2. Board Responsibilities - The Board must frame a policy for income recognition, collateral valuation and review/renewal of credit facilities. It must fix limits for larger advances and approve external stock auditors.
3. Disclosure Requirements - Banks must follow RBI's Financial Statements and Disclosure Directions for all IRAC-related disclosures.
4. Asset Classification Rules - Loans must be classified daily as standard or NPA based on recoveries. SMA/NPA tagging must follow day-end processing. Banks above specified asset thresholds must adopt system-based classification. Large accounts must be monitored closely to avoid delayed NPA identification.
5. Categories of NPAs - NPAs are classified as substandard, doubtful or loss assets. Severe security erosion or fraud leads to straightaway doubtful or loss classification. Security valuation for NPAs of Rs. 10 lakhs and above must be done through audits and periodic external valuation.
6. Upgradation & Reporting Rules - An NPA can become standard only after full repayment of all overdue interest and principal from genuine sources. Banks must ensure the account stays orderly thereafter. RBI expects strict adherence and may impose penalties for divergences.


For more information, please refer to the attached document.

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