Reserve Bank of India (Local Area Banks – Resolution of Stressed Assets) Amendment Directions, 2026

22-May-2026 , 06:21:24 pm | By CASANSAAR print

Reserve Bank of India (Local Area Banks – Resolution of Stressed Assets) Amendment Directions, 2026

RBI/2026-27/52
DOR.STR.REC.41/21-04-048/2026-27

April 29, 2026

Reserve Bank of India (Local Area Banks – Resolution of Stressed Assets) Amendment Directions, 2026

Please refer to Reserve Bank of India (Local Area Banks – Resolution of Stressed Assets) Directions, 2025 (hereinafter referred to as ‘the Directions’).

2. Reserve Bank had announced, as part of the Statement on Developmental and Regulatory Policies dated June 08, 2023, to issue guidelines rationalising the extant prudential norms for implementation of resolution plans in respect of exposures affected by natural calamities, inter alia harmonising the regulatory instructions applicable to different Regulated Entities (REs). Subsequently, based on a comprehensive review of the existing regulatory instructions, including the scope, coverage and prudential requirements, draft Directions were issued for public comments.

3. On examination of the feedback received 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 of India (hereinafter called 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.

4. These Amendment Directions modify the Directions as under:

i. Paragraph 4(1A) and 4(2A) shall be inserted as below:

(1A) ‘date of invocation’ shall mean the date on which the borrower and the bank agree to proceed with a resolution plan under Chapter IV-A of these Directions through a documented arrangement, other than in case of deemed invocation as specified in paragraph 31O of these Directions.

(2A) ‘natural calamity’ shall mean an event recognized under the National Disaster Response Fund (NDRF) / State Disaster Response Fund (SDRF)

ii. Paragraph 7A shall be inserted as under

7A. The board approved policy of the bank shall incorporate provisions for resolution as provided for under Chapter IV-A of these Directions, including the following:

(1) the objective principles for the terms of relief to be granted to various borrower / loan categories.

(2) the potential relief measures and the verifiable parameters for making such determination.

(3) the delegation matrix for deciding and implementing relief measures (if any), including for restructuring, sanction of additional finance etc., with focus on the timely implementation of relief measures.

iii. A new chapter IV-A as under shall be inserted: