Reserve Bank of India (Urban Co-operative Banks – Resolution of Stressed Assets) Directions, 2025 (Updated as on July 1, 2026)

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RBI/DOR/2025-26/287 DOR.STR.REC.206/21.04.048/2025-26 November 28, 2025 Previous Versions Reserve Bank of India (Urban Co-operative Banks – Resolution of Stressed Assets) Directions, 2025 (updated as on July 1, 2026) Table of Contents Chapter I - Preliminary A. Short title and commencement B. Applicability C. Definitions Chapter II - General Requirements A. Board approved policies: B. Early identification and reporting of stress C. Disclosures Chapter III - Prudential Norms Applicable to Restructuring A. Restructuring of accounts: General Instructions B. Asset Classification Post Restructuring C. Special Regulatory Treatment for Asset Classification D. Additional Finance E. Asset classification upgrade after satisfactory performance F. Provisioning post Restructuring G. Income Recognition Chapter IV - Special Cases of Restructuring A. Borrowers who have committed Frauds / Malfeasance / Wilful Default B. Compromise Settlements and Technical Write-offs C. [***] D. Projects Under Implementation E. Advances Granted under Rehabilitation Packages Approved by Term Lending Institutions Chapter IV-A: Resolution of Accounts Impacted by Calamities A. Resolution Plan B. Ancillary Measures C. Reporting Requirements Chapter V - Government Debt Relief Schemes (DRS) A. Prudential treatment in respect of Government Debt Relief Schemes (DRS): Chapter VI - Special Measures A. Trade Relief Measures Chapter VII - Repeal and Other Provisions A. Repeal and saving B. Application of other laws not barred C. Interpretations Annex I Annex II Introduction These Directions are issued with a view to providing a consolidated framework for resolution of stressed assets. These Directions also rationalise and harmonise the instructions on compromise settlements and technical write-offs, in order to provide impetus to resolution of stressed assets in the system. Further, these Directions lay down the consolidated regulatory treatment upon change in the Date of Commencement of Commercial Operations of projects in infrastructure and non-infrastructure (including commercial real estate & commercial real estate- residential housing). Some of the Urban Cooperative Banks (UCBs) may also be involved in implementation of various forms of Debt Relief Schemes (DRS) announced by State Governments that inter alia entail sacrifice / waiver of debt obligations of a targeted segment of borrowers, against fiscal support. If such schemes are announced frequently, incommensurately, or without due consideration to the principles of financial discipline, they would negatively affect credit discipline and in the long run, may be counter-productive to the credit flow to such borrowers. Apart from the broader implications for the credit discipline and moral hazard issues, DRS also raises certain prudential concerns, which include delay in receipt of dues; mismatch between the claims admitted / submitted by the UCBs and accepted by the concerned Government as per the terms of the scheme; mandatory requirement of fresh credit by the UCBs, etc. These Directions also lay down certain broad principles regarding participation of UCBs in DRS and specifies a model operating procedure, which has been shared with the State Governments for their consideration while designing and implementing such DRS to avoid any non-alignment of expectations of the stakeholders involved, including the Government, lenders, borrowers, etc. Accordingly, in exercise of the powers conferred by the Sections 21 and 35A read with Section 56 of the Banking Regulation Act, 1949, the Reserve Bank, being satisfied that it is necessary and expedient in public interest so to do, hereby, issues these Directions hereinafter specified. Chapter I - Preliminary A. Short title and commencement 1. These Directions shall be called the Reserve Bank of India (Urban Co-operative Banks – Resolution of Stressed Assets) Directions, 2025. 2. These Directions shall come into force with immediate effect unless specified otherwise. B. Applicability 3. These directions shall apply to Urban Co-operative Banks (hereinafter collectively referred to as 'UCBs' and individually as a 'UCB'). In this context, urban co-operative banks shall mean Primary Co-operative Banks as defined under section 5(ccv) read with Section 56 of Banking Regulation Act, 1949. 4. A UCB shall follow the requirements of the State Co-operative Societies Acts and / or rules made thereunder, or other statutory enactments, if they are more stringent than those prescribed hereby. C. Definitions 5. In these Directions, the following definitions shall apply, unless the context otherwise requires: (1) ‘advances’ shall mean all kinds of credit facilities including cash credit, overdrafts, term loans, bills discounted / purchased, receivables, etc. and investments other than that in the nature of equity. (2) ‘aggregate exposure’ shall include all fund based and non-fund based exposure, including investment exposure; (3) ‘compromise settlement’ shall refer to any negotiated arrangement with the borrower to fully settle the claims of a bank against the borrower in cash. Explanation: Compromise settlement may entail some sacrifice of the amount due from the borrower on the part of the bank with corresponding waiver of claims of the bank against the borrower to that extent. (4) ‘credit event’ in the context of projects under implementation shall be deemed to have been triggered on the occurrence of any of the following: (i) default with any lender; (ii) one or more lenders determine a need for extension of the original / extended Date of Commencement of Commercial Operations (DCCO), as the case may be, of a project; (iii) expiry of original / extended DCCO, as the case may be; (iv) one or more lenders determine a need for infusion of additional debt; (v) the project is faced with financial difficulty Explanation: For the purposes of this direction, financial difficulty would have the same meaning as specified in the Reserve Bank of India (Commercial Banks – Resolution of Stressed Assets) Directions, 2025 . 1 (4A) ‘date of invocation’ for the purpose of Chapter IV-A of these Directions shall mean the date on which the borrower and the bank agree to proceed with a resolution plan through a documented arrangement, other than in case of deemed invocation as specified in paragraph 99J of these Directions. (5) ‘default’ shall mean non-payment of debt (as defined under the Insolvency and Bankruptcy Code, 2016) when whole or any part or instalment of the debt has become due and payable and is not paid by the debtor or the corporate debtor, as the case may be. Provided that for revolving facilities like cash credit, default would also mean, without prejudice to the above, the outstanding balance remaining continuously in excess of the sanctioned limit or drawing power, whichever is lower, for more than 30 days. (6) ‘fully secured’ shall mean dues to a bank when the amounts due (present value of principal and interest receivable as per restructured loan terms) are fully covered by the value of security, duly charged in its favour in respect of those dues. Explanation: While assessing the realisable value of security, primary as well as collateral securities would be reckoned, provided such securities are tangible securities and are not in intangible form like guarantee etc., of the promoter / others. However, for this purpose the bank guarantees, State Government Guarantees and Central Government Guarantees will be treated on par with tangible security. (7) ‘interest during construction’ shall mean the interest accrued on debt provided by a UCB and capitalised during the construction phase of the project; (8) ‘lender’, in the context of project Finance directions, shall mean any of the following entities: (i) a Commercial Bank (including Small Finance Banks (SFBs) but excluding Payments Banks (PBs), Local Area Banks (LABs) and Regional Rural Banks (RRBs)); (ii) a Non-Banking Financial Company (NBFC (including a Housing Finance Company (HFC)); (iii) a Primary (Urban) Cooperative Bank; (iv) an All India Financial Institution. (9) ‘liquidation value’ shall mean the estimated realisable value of the assets of the relevant borrower, if such borrower were to be liquidated as on the date of commencement of the Review Period; 2 (9A) ‘natural calamity’ shall mean an event recognized under the National Disaster Response Fund (NDRF) / State Disaster Response Fund (SDRF); (10) ‘repeatedly restructured account’ shall mean an account that is restructured a second (or more) time(s) by the bank; Provided that if the second restructuring takes place after the period up to which the concessions were extended under the terms of the first restructuring, that account shall not be reckoned as a repeatedly restructured account. (11) ‘resolution plan’ in the context of projects under implementation shall mean a mutually agreed, legally binding, feasible and time-bound plan for resolution of stress in a project finance account. The resolution plan may involve any action / plan / reorganization including, but not limited to, regularisation of the account by payment of all overdues by the debtor entity, sale of the exposures to other entities / investors, change in ownership, extension of DCCO and restructuring. (12) ‘restructured account’ shall mean an account where the bank, for economic or legal reasons relating to the borrower's financial difficulty, grants to the borrower concessions that the bank would not otherwise consider. Explanation: Restructuring would normally involve modification of terms of the advances / securities, which would generally include, among others, alteration of repayment period / repayable amount / the amount of instalments / rate of interest (due to reasons other than competitive reasons). (13) ‘restructuring’ shall mean an act in which a bank, for economic or legal reasons relating to the borrower’s financial difficulty, grants concessions to the borrower. Explanation: Restructuring would normally involve modification of terms of the advances / securities, which would generally include, among others, alteration of payment period / payable amount / the amount of instalments / rate of interest; roll over of credit facilities; sanction of additional credit facility/ release of additional funds for an account in default to aid curing of default / enhancement of existing credit limits; compromise settlements where time for payment of settlement amount exceeds three months. (14) ‘review period’ shall mean a period of 30 days from the date of default or a credit event, as the case may be; (15) ‘satisfactory performance’ shall mean adherence to the following conditions during that period. (i) ‘Non-Agricultural Cash Credit Accounts’: In the case of non-agricultural cash credit accounts, the account should not be out of order any time during the specified period. In addition, there should not be any overdues at the end of the specified period. (ii) ‘Non-Agricultural Term Loan Accounts’: In the case of non-agricultural term loan accounts, no payment should remain overdue for a period of more than 90 days. In addition there should not be any overdues at the end of the specified period. (iii) ‘All Agricultural Accounts’: In the case of agricultural accounts, at the end of the specified period the account should be regular. (16) ‘SMEs’ shall mean Small and Medium Enterprises as defined in terms of the circular FIDD.MSME & NFS.BC.No.4/06.02.31/2020-21 dated August 21, 2020 on ‘New Definition of Micro, Small and Medium Enterprises – clarifications’ as updated from time to time. (17) ‘specified period’ shall mean a period of one year from the date when the first payment of interest or installment of principal falls due under the terms of restructuring package. Provided that for accounts restructured under IBC, the specified period shall be deemed to commence from the date of implementation of the resolution plan as approved by the Adjudicating Authority. (18) ‘standby credit facility’ shall mean a contingent credit line sanctioned for the project at the time of financial closure to fund any cost overrun during the construction phase of the project. (19) ‘technical write-off’ shall refer to cases where the non- performing assets remain outstanding at borrowers’ loan account level, but are written-off (fully or partially) by a bank only for accounting purposes, without involving any waiver of claims against the borrower, and without prejudice to the recovery of the same. 6. The terms ‘Appointed Date, Commercial Real Estate (CRE)’, ‘Commercial Real Estate – Housing (CRE-RH)’, ‘Construction phase’, ‘Date of Financial Closure’, ‘Infrastructure Sector’, ‘Original Date of Commencement of Commercial Operations (Original DCCO)’, ‘Extended DCCO’, ‘Actual DCCO’, ‘Project’, and ‘Project Finance’ shall have the same meaning assigned to them in the Reserve Bank of India (Urban Co-operative Banks – Credit Facilities) Directions, 2025 . 7. All other expressions, unless defined herein, shall have the same meaning as have been assigned to them under the Banking Regulation Act, 1949 or the Reserve Bank of India Act, 1934 or the Companies Act, 2013, or any statutory modification or re-enactment thereto or other regulations issued by the Reserve Bank or the Glossary of Terms published by the Reserve Bank or as used in commercial parlance, as the case may be. Chapter II - General Requirements A. Board approved policies: 8. A bank shall put in place a Board-approved policy for restructuring / rehabilitation of stressed assets. 9. A bank shall put in place Board-approved policies for undertaking compromise settlements with the borrowers as well as for technical write-offs, which shall inter alia include the following: (1) comprehensive prescription of the process to be followed for all compromise settlements and technical write-offs, with specific guidance on the necessary conditions precedent such as minimum ageing, deterioration in collateral value etc.; (2) graded framework for examination of staff accountability in such cases with reasonable thresholds and timelines as may be decided by the Board; (3) provisions relating to permissible sacrifice for various categories of exposures while arriving at the settlement amount, after prudently reckoning the current realisable value of security/collateral, where available; (4) methodology for arriving at the realisable value of the security in respect of compromise settlements. (5) delegation of powers for approval / sanction of compromise settlements and technical write-offs, subject to the following: (i) delegation of power for such approvals rests with an authority (individual or committee, as the case may be) which is at least one level higher in hierarchy than the authority vested with power to sanction the credit / investment exposure. Provided that any official who was part of sanctioning the loan (as individual or part of a committee) shall not be part of the approving the proposal for compromise settlement of the same loan account, in any capacity. (ii) proposals for compromise settlements in respect of borrowers classified as fraud or wilful defaulter, as permitted in terms of paragraphs 51 to 65, shall require approval of the Board in all cases. 3 [9A. 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.] B. Early identification and reporting of stress 10. A bank shall recognise incipient stress in loan accounts, immediately on default, by classifying such assets as special mention accounts (SMA) as per the following categories: Loans other than revolving facilities Loans in the nature of revolving facilities like cash credit/overdraft SMA Sub-categories Basis for classification – Principal or interest payment or any other amount wholly or partly overdue SMA Sub-categories Basis for classification – Outstanding balance remains continuously in excess of the sanctioned limit or drawing power, whichever is lower, for a period of: SMA-0 Up to 30 days SMA-1 More than 30 days and up to 60 days SMA-1 More than 30 days and up to 60 days SMA-2 More than 60 days and up to 90 days SMA-2 More than 60 days and up to 90 days 11. The instructions on classification of borrower accounts into SMA categories are applicable for all loans (including retail loans), other than agricultural advances governed by crop season-based asset classification norms, irrespective of size of exposure of the regulated entity. 12. A bank having total assets of ₹500 crore and above shall report credit information, including classification of an account as SMA, to Central Repository of Information on Large Credits (CRILC), on all borrowers having aggregate exposure of ₹5 crore and above with them, on a quarterly basis. 13. A bank shall adhere to the relevant provisions on submission of financial information to information utilities of Insolvency and Bankruptcy Code, 2016 and Insolvency and Bankruptcy Board of India (Information Utilities) Regulations, 2017 and put in place appropriate systems and procedures to ensure compliance to the provisions of the Code and Regulations. C. Disclosures 14. A bank shall make suitable disclosures in its financial statements in the ‘Notes to Accounts’, as specified in the Reserve Bank of India (Urban Co-operative Banks – Financial Statements: Presentation and Disclosures) Directions, 2025 . Chapter III - Prudential Norms Applicable to Restructuring A. Restructuring of accounts: General Instructions 15. A bank shall ensure careful assessment of the viability, quick detection of weaknesses in accounts and a time-bound implementation of restructuring packages to achieve the basic objective of preservation of economic value of units through restructuring. 16. A bank may restructure the accounts classified under 'standard', 'sub-standard' and 'doubtful' categories. 17. A bank shall not reschedule / restructure / renegotiate borrower accounts with retrospective effect. 18. In normal cases, restructuring cannot take place unless alteration / changes in the original loan agreement are made with the formal consent / application of the borrower. 19. Notwithstanding paragraph 18 above, the process of restructuring may be initiated by a bank in deserving cases subject to customer agreeing to the terms and conditions. 20. Restructuring of advances may take place in the following stages: (1) before commencement of commercial production / operation; (2) after commencement of commercial production / operation but before the asset has been classified as 'sub-standard'; (3) after commencement of commercial production / operation and the asset has been classified as 'sub-standard' or 'doubtful'. 21. A bank shall not take up an account for restructuring unless the financial viability is established and there is a reasonable certainty of repayment from the borrower, as per the terms of restructuring package. 22. For the purpose of paragraph 21 above, the viability shall be determined by a UCB based on the acceptable viability benchmarks determined by them, which may be applied on a case-by-case basis, depending on merits of each case. Explanation: Illustratively, the viability parameters may include the Return on Capital Employed, Debt Service Coverage Ratio, Gap between the Internal Rate of Return and Cost of Funds and the amount of provision required in lieu of the diminution in the fair value of the restructured advance. 23. The usual asset classification norms would continue to apply while a restructuring proposal is under consideration and the process of re-classification of an asset shall not stop merely because restructuring proposal is under consideration. 24. The asset classification status as on the date of approval of the restructured package by the competent authority would be relevant to decide the asset classification status of the account after restructuring / rescheduling /renegotiation. 25. In case there is undue delay in sanctioning a restructuring package and in the meantime the asset classification status of the account undergoes deterioration, it would be a matter of supervisory concern. 26. The accounts not considered viable shall not be restructured and the bank shall accelerate the recovery measures in respect of such accounts. 27. Any restructuring done without looking into cash flows of the borrower and assessing the viability of the projects / activity financed by a bank shall be treated as an attempt at ever greening a weak credit facility and shall invite supervisory concerns / action. B. Asset Classification Post Restructuring 28. The accounts classified as 'standard assets' shall be immediately re-classified as 'sub-standard assets' upon restructuring. 29. An account classified as a non-performing asset, upon restructuring, shall slip into further lower asset classification category as per extant asset classification norms with reference to the pre-restructuring repayment schedule. 30. If a restructured asset, which is a standard asset on restructuring is subjected to restructuring on a subsequent occasion, it shall be classified as substandard. 31. If the restructured asset is a sub-standard or a doubtful asset and is subjected to restructuring, on a subsequent occasion, its asset classification will be reckoned from the date when it became non-performing asset on the first occasion. 32. However, such advances restructured on second or more occasion shall be allowed to be upgraded to standard category after the specified period in terms of the current restructuring package, subject to satisfactory performance. 33. A bank shall classify Funded Interest Term Loan' (FITL) created by conversion of unpaid interest in the same asset classification category in which the restructured advance has been classified. Further movement in the asset classification of FITL would also be determined based on the subsequent asset classification of the restructured advance. C. Special Regulatory Treatment for Asset Classification 34. A bank shall be eligible for special regulatory treatment in respect of borrowers engaged in important business activities, subject to compliance with certain conditions as enumerated in paragraphs 37 and 38. Provided that such special regulatory treatment shall not be extended to the following categories of advances: (1) Consumer and personal advances including advances to individuals against the securities of shares/bonds/debentures etc. (2) Advances to traders Provided further that housing loans granted by a bank would also be eligible for special regulatory treatment, if restructured. 35. The asset classification of the above two categories of accounts as well as that of other accounts which do not comply with the conditions enumerated in paragraphs 37 and 38, will be governed by the prudential norms in this regard described in paragraphs 28 to 33. 36. The special regulatory treatment has the following two components: (1) Incentive for quick implementation of the restructuring package. (2) Retention of the asset classification of the restructured account in the pre restructuring asset classification category 37. As an incentive for quick implementation of restructuring package, if the approved package is implemented by the bank within 90 days from the date of receipt of application by the bank, the asset classification status may be restored to the position which existed when the restructuring application was received by the bank. 38. An existing standard asset shall not be downgraded to the sub-standard category upon restructuring and the asset classification of the sub-standard/doubtful accounts shall not deteriorate upon restructuring, subject to compliance with the following conditions: (1) The dues to the bank are ‘fully secured’ Provided that the above requirement shall not be applicable in the following cases: (i) Small Scale Industries (SSI) borrowers, where the outstanding is up to ₹25 lakh. (ii) infrastructure projects, provided the cash flows generated from these projects are adequate for repayment of the advance, the financing UCB have in place an appropriate mechanism to escrow the cash flows, and also have a clear and legal first claim on these cash flows. (iii) working capital term loans created by conversion of the irregular portion of principal dues over the drawing power, subject to the condition that provisions are made against the unsecured portion as per paragraph 45. (2) The unit becomes viable in ten years, if it is engaged in infrastructure activities, and in seven years in the case of other units. (3) The repayment period of the restructured advance including the moratorium, if any, does not exceed fifteen years in the case of infrastructure advances and ten years in the case of other advances. (4) The Board of Directors of the bank shall prescribe the maximum period not exceeding fifteen years for restructured advances keeping in view the safety and soundness of advances. (5) Promoters' sacrifice and additional funds brought by them should be a minimum of 15 per cent of bank’s sacrifice. (6) Personal guarantee is offered by the promoter except when the unit is affected by external factors pertaining to the economy and industry. (7) The restructuring under consideration is not a repeated restructuring. D. Additional Finance 39. Any additional finance sanctioned by a bank may be treated as 'standard asset', up to a period of one year after the first interest / principal payment, whichever is earlier, falls due under the approved restructuring package. 40. If the restructured asset does not qualify for upgradation at the end of the one-year period specified in paragraph 39, a bank shall place the additional finance in the same asset classification category as the restructured debt. E. Asset classification upgrade after satisfactory performance 41. A restructured account which has been classified as non-performing asset upon restructuring by a bank, would be eligible for upgradation to the 'standard' category after observation of 'satisfactory performance' during the 'specified period'. 42. If satisfactory performance during the specified period is not evidenced, the asset classification of the restructured account, including an account eligible for special regulatory treatment in terms of paragraphs 34 to 38, would be governed as per the applicable prudential norms with reference to the pre-restructuring payment schedule. F. Provisioning post Restructuring 43. An account that has been restructured shall attract provisioning as per the asset classification category as laid out in the Reserve Bank of India (Urban Co-operative Banks – Income Recognition, Asset Classification and Provisioning) Directions, 2025 . 44. A bank shall make provisions for diminution in the fair value of restructured advances as below: (1) The erosion in the fair value of the advance shall be computed as the difference between the fair value of the loan before and after restructuring. Explanation: The provisions required as above arise due to the action of a bank resulting in change in contractual terms of the loan upon restructuring which are in the nature of financial concessions. These provisions are distinct from the provisions which are linked to the asset classification of the account classified as non-performing asset and reflect the impairment due to deterioration in the credit quality of the loan. Thus, the two types of the provisions are not substitute for each other. (2) Fair value of the loan before restructuring shall be computed as the present value of cash flows representing the interest at the existing rate charged on the advance before restructuring and the principal, discounted at a rate equal to the bank's base prime lending rate, as on the date of restructuring plus the appropriate term premium and credit risk premium for the borrower category on the date of restructuring. (3) Fair value of the loan after restructuring shall be computed as the present value of cash flows representing the interest at the rate charged on the advance on restructuring and the principal, discounted at a rate equal to the bank's base prime lending rate as on the date of restructuring plus the appropriate term premium and credit risk premium for the borrower category on the date of restructuring. Explanation: The above formula moderates the swing in the diminution of present value of loans with the interest rate cycle and will have to be followed consistently in future. (4) In the case of working capital facilities, the diminution in the fair value of the cash credit / overdraft component shall be computed as indicated in sub-paragraphs (1) to (3) above, reckoning the higher of the outstanding amount or the limit sanctioned as the principal amount and taking the tenor of the advance as one year, with the term premium in the discount factor as that would be as applicable for one year. (5) In the case of working capital facilities, the fair value of the term loan components (Working Capital Term Loan and Funded Interest Term Loan) shall be computed as per actual cash flows and taking the term premium in the discount factor as applicable for the maturity of the respective term loan components. (6) If any security is taken in lieu of the diminution in the fair value of the advance, it shall be valued at ₹1/- till maturity of the security. (7) The diminution in the fair value shall be re-computed on each balance sheet date till satisfactory completion of all repayment obligations and full repayment of the outstanding in the account, to capture the changes in the fair value on account of changes in the base prime lending rate, term premium and credit category of the borrower, and consequently, the shortfall in provision shall be provided for or amount of excess provision held in the distinct account may be reversed, as the case may be. (8) If due to lack of expertise/appropriate infrastructure, a bank finds it difficult to ensure computation of diminution in the fair value of advances extended by small branches, the bank shall have the alternative option of notionally computing the amount of diminution in the fair value and providing therefor, at five percent of the total exposure, in respect of all restructured accounts where the total dues to bank are less than ₹1 crore. (9) The total provisions required against an account (normal provisions plus provisions in lieu of diminution in the fair value of the advance) shall be capped at 100 per cent of the outstanding debt amount. 45. A bank availing special regulatory treatment for asset classification in terms of paragraphs 34 to 38 shall make the following provisions in respect of unsecured portion of the working capital term loans created by conversion of the irregular portion of principal dues over the drawing power (1) Standard Assets: 20 per cent (2) Substandard Assets: 20 per cent during the first year and to be increased by 20 per cent every year thereafter until the specified period (3) If the account is not eligible for upgradation after the specified period, the unsecured portion shall attract provision of 100 per cent. G. Income Recognition 46. Interest income in respect of restructured accounts classified as 'standard assets' may be recognized on accrual basis and that in respect of the restructured accounts classified as 'non-performing assets' shall be recognised on cash basis. 47. A bank shall recognize interest income on the additional finance only on cash basis in the case of accounts where the pre-restructuring facilities were classified as 'sub-standard' and 'doubtful'. 48. A bank shall recognise interest income on ‘Funded Interest Term Loan’ (FITL) created by conversion of unpaid interest as follows: (1) The income, if any, generated may be recognised on accrual basis, if FITL is classified as ‘standard’, and on cash basis in the cases where the same has been classified as a non-performing asset. (2) The unrealised income represented by FITL should have a corresponding credit in an account styled as ‘Sundry Liabilities Account (Interest Capitalization)’. (3) Only on repayment in case of FITL, the amount received will be recognized in the Profit and Loss Account, while simultaneously reducing the balance in the ‘Sundry Liabilities Account (Interest Capitalisation)’. Chapter IV - Special Cases of Restructuring A. Borrowers who have committed Frauds / Malfeasance / Wilful Default 49. Borrowers who have committed frauds/ malfeasance/ wilful default as well as any entity with which a wilful defaulter is associated shall remain ineligible for restructuring. 50. A wilful defaulter or any entity with which a wilful defaulter is associated shall be eligible for restructuring subsequent to removal of the name of wilful defaulter from the List of Wilful Defaulters, subject to penal measures applicable to borrowers classified as wilful defaulter in terms of the Reserve Bank of India (Urban Co-operative Banks – Treatment of Wilful Defaulters and Large Defaulters) Directions, 2025 . B. Compromise Settlements and Technical Write-offs 51. The objective of compromise settlements shall be to maximise the possible recovery from a distressed borrower at minimum expense, in the best interest of the bank. 52. Compromise settlement is not available to borrowers as a matter of right; rather it is a discretion to be exercised by a bank based on its commercial judgement. 53. The compromise settlements and technical write-offs shall be without prejudice to any mutually agreed contractual provisions between a bank and a borrower relating to future contingent realizations or recovery by the bank, subject to such claims not being recognised in any manner on the balance sheet of the bank at the time of the settlement or subsequently till actual realization of such receivables. Provided that any such claims recognised on the balance sheet of the bank shall render the arrangement to be treated as restructuring. 54. Notwithstanding paragraph 53, compromise settlements where the time for payment of the agreed settlement amount exceeds three months shall be treated as restructuring. 55. Any arrangement involving part settlement with the borrower shall also fall under the definition of restructuring and shall be governed by the provisions applicable thereto. 56. Technical write-off is an accounting procedure undertaken by a bank to cleanse the balance sheets of bad debts which are either considered unrecoverable or whose recovery is likely to consume disproportionate resources of the lenders. However, such technical write-offs do not entail any waiver of claims against the borrower and thus the bank’s right to recovery shall not be undermined in any manner. The legal obligation of the borrowers as well as the costs of such defaults for them remain unchanged vis-à-vis the position prior to technical write-offs. 57. In case of partial technical write-offs, the prudential requirements in respect of residual exposure, including provisioning and asset classification, shall be with reference to the original exposure. Provided that the amount of provision including the amount representing partial technical write-off shall meet the extant provisioning requirements, as computed on the gross value of the asset. 58. There shall be a reporting mechanism to the next higher authority, at least on a quarterly basis, with respect to compromise settlements and technical write offs approved by a particular authority. Provided that compromise settlements and technical write-offs approved by the MD & CEO / Board Level Committee shall be reported to the Board. 59. The Board shall mandate a suitable reporting format so as to ensure adequate coverage of the following aspects at the minimum: (1) trend in number of accounts and amounts subjected to compromise settlement and/or technical write-off (q-o-q and y-o-y); (2) out of sub-paragraph (1) above, separate breakup of accounts classified as fraud, red-Flagged, wilful default and quick mortality accounts; (3) amount-wise, sanctioning authority-wise, and business segment / asset-class wise grouping of such accounts; (4) extent of recovery in technically written-off accounts. 60. In respect of borrowers subject to compromise settlements, there shall be a cooling period as determined by the respective Board approved policies before the bank can assume fresh exposures to such borrowers. Provided that the cooling period in respect of exposures other than farm credit exposures shall be subject to a floor of 12 months with a bank being free to stipulate higher cooling periods in terms of their Board approved policies. Provided further that the cooling period for farm credit exposures shall be determined by a bank as per their respective Board approved policies. Explanation: Farm credit for the above purpose shall refer to credit extended to agricultural activities as listed in the Reserve Bank of India (Urban Co-operative Banks – Income Recognition, Asset Classification and Provisioning) Directions, 2025 . 61. The cooling period to be adopted in respect of exposures subjected to technical write-offs shall be as per the Board approved policies of a bank. 62. A bank may undertake compromise settlements or technical write-offs in respect of accounts categorised as wilful defaulters or fraud without prejudice to the criminal proceeding underway against such borrowers. 63. The penal measures applicable to borrowers classified as fraud or wilful defaulter in terms of the Reserve Bank of India (Fraud Risk Management in UCBs / StCBs / CCBs) Directions, 2024 and the Reserve Bank of India (Urban Co-operative Banks – Treatment of Wilful Defaulters and Large Defaulters) Directions, 2025 , respectively, shall continue to be applicable in cases where a UCB enter into compromise settlement with such borrowers, and the cooling periods specified in paragraphs 61 and 62, in respect of such borrowers, shall be without prejudice to such penal measures. FAQ 1: From a public policy perspective, what is the rationale for permitting a bank to enter into compromise settlement with borrowers classified as fraud or wilful defaulter? The primary regulatory objective is to enable multiple avenues to a bank to recover the money in default without much delay. Apart from the time value loss, inordinate delays result in asset value deterioration which hampers ultimate recoveries. Compromise settlement is recognized as a valid resolution mechanism under these Directions. The imperatives for a bank are no different when it comes to recovery from borrowers classified as fraud or wilful defaulter. Continuing such exposures on the balance sheets of a bank without resolution due to legal proceedings would lock the bank’s funds in an unproductive asset, which would not be a desirable position. As long as larger policy concerns are suitably addressed and the costs of malafide actions are made to be borne by the perpetrators, early recoveries by a bank should be a preferred option, subject to safeguards. Further, continuation of criminal proceedings underway or to be initiated against the borrowers classified as fraud or wilful defaulter, would ensure that perpetrators of any malafide action do not go scot-free. FAQ 2: A bank is not permitted to restructure borrower accounts classified as fraud or wilful defaulter. Why a different treatment is prescribed for compromise settlements for such borrowers? Restructuring in general entails a bank having a continuing exposure to the borrower entity even after restructuring and hence, in case of borrowers classified as fraud or wilful defaulter, permitting the bank to continue its credit relationship with the borrower entity would be fraught with moral hazard. On the other hand, a compromise settlement entails a complete detachment of the bnak with the borrower. Therefore, permitting a bank to settle with the borrowers as per their commercial judgement would enhance recovery prospects. 64. The compromise settlements with the borrowers under these Directions shall be without prejudice to the provisions of any other statute in force. 65. Wherever a bank had commenced recovery proceedings under a judicial forum and the same is pending before such judicial forum, any settlement arrived at with the borrower shall be subject to obtaining a consent decree from the concerned judicial authorities. C. 4 [***] 66. 5 [***] 67. 6 [***] 68. 7 [***] D. Projects Under Implementation 69. The instructions contained in paragraphs 71 to 94 shall not apply to projects where financial closure has been achieved as on October 1, 2025, for which the prudential guidelines on project finance prevailing before October 1, 2025, which otherwise shall be treated as repealed, shall apply. 70. Notwithstanding the instructions in paragraph 69, any resolution of a fresh credit event and/or change in material terms and conditions in the loan contract in such projects, on or after October 1, 2025, shall be as per the guidelines contained in paragraphs 71 to 94. 71. A bank shall monitor the performance of the project and any buildup of stress on an ongoing basis and shall be expected to initiate a resolution plan well in advance. 72. Occurrence of a credit event with any lender during the construction phase, shall trigger the Review Period. 73. Any such credit event with a bank shall be reported to the Central Repository of Information on Large Credit (CRILC) by the bank in the CRILC-Main report in compliance with paragraph 12. 74. A bank, which is part of a consortium / multiple lending arrangement shall also report occurrence of such credit event to all other members of the consortium / multiple lending arrangement. 75. The instructions on CRILC reporting as per paragraph 73 shall be issued in due course. 76. A bank shall undertake a prima facie review of the borrower account during the Review Period. 77. During this Review Period, lenders shall decide on the resolution strategy, including the nature of the resolution plan, the approach for implementation of the resolution plan, etc. 78. The lenders may also choose to initiate legal proceedings for insolvency or recovery. 79. In cases where resolution plan involving extension of original / extended DCCO, as the case maybe is to be implemented, all lenders, including the bank, shall enter into an inter-creditor agreement, during the Review Period, to provide for ground rules for finalisation and implementation of the resolution plan in respect of borrowers with credit facilities from more than one lender. 80. The inter-creditor agreement shall provide that: (1) any decision agreed by signatories representing 75 per cent by value of total outstanding credit facilities (fund based as well non-fund based) and 60 per cent of signatories by number shall be binding upon all the signatories; and (2) resolution plans shall provide for payment not less than the liquidation value due to the dissenting signatories. 81. In addition to the requirements in paragraph 80 above, the inter-creditor agreement shall, inter alia, provide for rights and duties of majority signatories, duties and protection of rights of dissenting signatories, treatment of signatories with priority in cash flows / differential security interest, etc. 82. The resolution plan shall be clearly documented by the lenders concerned (even if there is no change in any terms and conditions). 83. If a resolution plan involving extension of original / extended DCCO, as the case maybe, is implemented in a project finance account, which is classified as Standard and satisfies all relevant prudential conditions specified for sanction, disbursement and monitoring of project finance in the Reserve Bank of India (Urban Co-operative Banks – Credit Facilities) Directions, 2025 , the asset classification of such account shall continue to be classified as ‘Standard’, provided the envisaged resolution plan ab initio conforms to the following conditions: (1) Permitted DCCO Deferment – Original / extended DCCO, as the case may be, is extended, along with the consequential shift in repayment schedule for equal or shorter duration (including the start date and end date of revised repayment schedule), within the following time limits: Infrastructure Projects Non-Infrastructure Projects (including CRE and CRE-RH) Permitted deferment of DCCO from the original DCCO Up to 3 years Up to 2 years Explanation: For CRE and CRE-RH projects, all provisions of the Real Estate (Regulation and Development) Act, 2016 (as updated from time to time) are to be complied with. (2) Cost Overrun – A bank may finance, as part of a resolution plan, cost overrun associated with permitted DCCO deferment in compliance with sub-paragraph (1) above, and classify the account as ‘standard’, as under: (i) Cost overrun up to a maximum of ten per cent of the original project cost, in addition to Interest During Construction. (ii) Cost overrun is financed through a Standby Credit Facility specifically sanctioned by the bank at the time of financial closure and which has been renewed continuously without any gap till the draw down under the facility. (iii) For infrastructure projects, in cases where Standby Credit Facility was not sanctioned at the time of financial closure, or was sanctioned but not renewed subsequently, such additional funding shall be priced at a premium to what would have been applicable on a pre-sanctioned Standby Credit Facility. A Bbank shall ensure that the loan-contracts ab-initio specify the additional risk premium to be charged on such Standby Credit Facility, which may be revised upwards based on actual risk assessment at the time of sanction of such facilities. (iv) The financial parameters like D/E ratio, external credit rating (if any) etc. remain unchanged or are enhanced in favour of the bank post such cost overrun funding. Explanation: For projects where aggregate exposure of all lenders is less than ₹100 crore, internal credit rating may be considered, if the project was originally not credit rated externally. (3) Change in Scope and Size – A project finance account where DCCO extension is necessitated by an increase in the project outlay on account of increase in scope and size of the project, may be classified as ‘Standard’, subject to complying with the following conditions: (i) The rise in project cost excluding any cost-overrun in respect of the original project is 25 per cent or more of the original outlay as the case may be. Illustration I: Original cost of the Project – ₹1,000 crore Revised cost of the Project – ₹1,200 crore Increase in cost – ₹200 crore i.e., 20% Attribution of increase in cost a. Change in Scope 18% b. Cost Overrun 2% The increase in cost attributable to change in scope is ₹180 crore (18%) only. Since rise in cost on account of change in scope is 18%, which is less than 25%, no asset classification benefit shall be available. Illustration II: Original cost of the Project – ₹1,000 crore Revised cost of the Project – ₹1,400 crore Increase in cost – ₹400 crore i.e., 40% Attribution of increase in cost a. Change in Scope 30% b. Cost Overrun 10% The increase in cost attributable to change in scope is ₹300 crore (30%). Since rise in cost on account of change in scope is 30%, which is more than 25%, asset classification benefit shall be available. (ii) The UCB re-assesses the viability of the project before approving the enhancement of scope and fixing a fresh DCCO. (iii) On re-rating (if already rated), the new external credit rating is not below the previous external credit rating by more than one notch. Provided that if the project debt was unrated at the time of increase in scope or size, then it should be externally rated investment grade upon such increase in scope or size in case of projects where aggregate exposure of all lenders is equal to or greater than ₹100 crores. 84. The standard asset classification benefit on account of ‘change in scope’ shall be allowed only once during the lifetime of the project. 85. In all the cases specified in paragraph 83, the following conditions shall be required to be met in respect of all the lenders before the expiry of 180 days from the end of the Review Period, for successful implementation of a resolution plan: (1) all required documentation, including execution of necessary agreements between a lender and the borrower / creation of security charge / perfection of securities, are completed in consonance with the resolution plan being implemented; (2) the new capital structure and/ or changes in the financing agreement get duly reflected in the books of a lender and the borrower. 86. If a resolution plan involving change in DCCO is not successfully implemented in terms of paragraph 83 and / or 85, then the account shall be downgraded to NPA immediately. 87. A project finance account downgraded to NPA for non-compliance with paragraph 83, can be upgraded only after the account performs satisfactorily post actual DCCO. 88. A project finance account downgraded to NPA for non-compliance with paragraph 85, may be upgraded on successful implementation of resolution plan, provided no further request for deferment of DCCO is received. 89. Income recognition in respect of a project finance account where a resolution plans involving extension of Original / Extended DCCO shall be as follows: (1) A bank may recognise income on accrual basis in respect of project finance exposures which are classified as ‘Standard’. (2) For NPAs, income recognition shall be as per instructions contained in the Reserve Bank of India (Urban Co-operative Banks – Income Recognition, Asset Classification and Provisioning) Directions, 2025 . 90. For accounts which have availed DCCO deferment as per paragraphs 83 to 86 and are classified as ‘standard’, a bank shall maintain additional specific provisions of 0.375 per cent for infrastructure project loans and 0.5625 per cent for non-infrastructure project loans (including CRE and CRE-RH), for each quarter of deferment, over and above the applicable standard asset provision specified in the Reserve Bank of India (Urban Co-operative Banks – Income Recognition, Asset Classification and Provisioning) Directions, 2025 . Infrastructure Projects Non Infra Projects (including CRE and CRE-RH) Illustration III: Funded Outstanding – ₹1000 crore Original DCCO – January 01, 2026 Extended DCCO – April 01, 2026 Quantum of Specific Provisions to be maintained – ₹3.750 crore Illustration IV: Funded Outstanding – ₹1000 crore Original DCCO – January 01, 2026 Extended DCCO – April 01, 2026 Quantum of Specific Provisions to be maintained – ₹5.625 crore Illustration V: Funded Outstanding – ₹1000 crore Original DCCO – January 01, 2026 Extended DCCO – April 01, 2027 Quantum of Specific Provisions to be maintained – ₹18.750 crore Illustration VI: Funded Outstanding – ₹1000 crore Original DCCO – January 01, 2026 Extended DCCO – April 01, 2027 Quantum of Specific Provisions to be maintained – ₹28.125 crore Illustration VII: Funded Outstanding – ₹1000 crore Original DCCO – January 01, 2026 Extended DCCO – April 01, 2029 Asset Classification - NPA Quantum of Specific Provisions to be maintained– ₹150 crore Illustration VIII: Funded Outstanding – ₹1000 crore Original DCCO – January 01, 2026 Extended DCCO – April 01, 2028 Asset Classification - NPA Quantum of Specific Provisions to be maintained – ₹150 crore 91. The additional specific provisions required as per paragraph 90 shall be reversed upon commencement of commercial operation. 92. The provisions stipulated in paragraph 90 shall not be applicable for existing projects which are specified in paragraph 69 and such project loans shall continue to be guided by the prudential guidelines for the purpose of provisioning, prevailing before October 1, 2025, shall apply, which otherwise shall be treated as repealed. 93. Notwithstanding the instructions in paragraph 94, in case of any resolution of a fresh credit event and / or change in material terms and conditions in the loan contract in such projects, the provisions stipulated in paragraph 90 shall apply to these projects as if these were sanctioned on or after October 1, 2025. 94. Provisioning for project loans classified as ‘standard’ (construction or operational phase) or NPA shall be as per extant instructions contained in the Reserve Bank of India (Urban Co-operative Banks – Income Recognition, Asset Classification and Provisioning) Directions, 2025 . E. Advances Granted under Rehabilitation Packages Approved by Term Lending Institutions 95. A bank shall not upgrade the classification of any advance in respect of which the terms have been re-negotiated unless the package of re-negotiated terms has worked satisfactorily for a period of one year. 96. While the existing credit facilities sanctioned to a unit under rehabilitation packages approved by term lending institutions shall continue to be classified as sub-standard or doubtful, as the case may be, in respect of additional facilities sanctioned under the rehabilitation packages, the asset classification and income recognition norms shall become applicable after a period of one year from the date of disbursement. 97. A similar relaxation shall be made in respect of SSI units which are identified as sick by banks themselves and where rehabilitation packages / nursing programmes have been drawn by the banks themselves or under consortium arrangements. 98. A bank shall make provisions in respect of advances granted under rehabilitation packages approved by Term Lending Institutions as per the above asset classification norms. 99. In respect of additional credit facilities granted to SSI units which are identified as sick and where rehabilitation packages / nursing programmes have been drawn by the bank itself or under consortium arrangements, no provision need be made for a period of one year. 8 [Chapter IV-A: Resolution of Accounts Impacted by Calamities 99A. The instructions contained in this Chapter shall be applicable to resolution of exposures of borrowers impacted by a natural calamity or, mutatis mutandis, exposures of borrowers impacted by external events such as riots / disturbances that result in loss to economic activity that result in loss to economic activity (hereinafter collectively referred to as ‘calamity’), upon the declaration of such calamity by the Central / State Governments (in accordance with the framework placed by the concerned Government for this purpose). 99B. These instructions shall not apply to borrower accounts where relief measures have been already provided as on the effective date of these Amendment Directions, and such accounts shall continue to be guided by the existing prudential guidelines. However, any fresh resolution in such accounts subsequent to the effective date of these Amendment Directions shall be as per the guidelines contained in this Chapter. 99C. The decisions taken in the special State Level Bankers’ Committee (SLBC) / Union Territory Level Bankers' Committee (UTLBC) / District Consultative Committee (DCC) shall be communicated to the banks by the convenor of the respective SLBC/ UTLBC / DCC. 99D. The decisions taken in the special SLBC / UTLBC / DCC meeting(s) shall be given adequate publicity by banks through various methods such as brochures, banners, advertisement in newspapers, visits by field staff, and other suitable modes, for the benefit of affected borrowers. A. Resolution Plan 99E. Banks may implement resolution plans in respect of impacted borrowers subject to the provisions of this Chapter, taking into account inter alia the proposals received from the SLBC / UTLBC / DCC. (a) Eligibility 99F. Those borrowers shall be eligible for resolution under this Chapter whose accounts are classified as ‘Standard’, but which are not in default for more than 30 days with the bank in respect of any of their facilities, as on the date of occurrence of the calamity. Explanation: In case no specific date of occurrence is ascertainable in respect of a calamity, the date of declaration of such calamity by the Central / State Governments shall be treated as the date of occurrence. 99G. Borrowers, whose loan accounts do not fulfil the required eligibility conditions for resolution under this Chapter may continue to be considered for resolution under other provisions of these Directions. 99H. The provisions of this Chapter shall not apply to the refinance portfolio of a bank. (b) Invocation and Implementation 99I. Resolution under this Chapter shall be invoked no later than 45 days from the date of the declaration of calamity and shall be implemented within 135 days from the date of the declaration. 99J. A bank need not wait for receipt of a formal request from a borrower and may decide to suo moto implement a resolution plan for the impacted borrowers consequent to the recommendation of SLBC / UTLBC / DCC, as mentioned in paragraph 99E of these Directions. The resolution in such cases shall be deemed to have been invoked from the said date. Provided that, in such cases of deemed invocation, a bank shall communicate the same to the borrower, and shall also make available the option for the borrower to opt out of the resolution plan at any point till the end of 135 days from the date of declaration of calamity. (c) Nature of Resolution Plan 99K. The resolution plan to be implemented by a bank, taking into account inter alia the recommendation of the SLBC / UTLBC / DCC, may include rescheduling of payments; conversion of any interest accrued or to be accrued into another credit facility, etc. based on an assessment of the viability prospects of the borrower, etc. 99L. The resolution plan may also include proposal for sanction of additional finance to address the financial stress of the borrower, subject to due assessment of the viability prospects of the borrower. B. Ancillary Measures 99M. While restructuring various types of loans in an area affected by a calamity, banks may also take into account the insurance proceeds, if any, receivable from insurance companies in respect of those loans. The insurance proceeds upon receipt shall be adjusted towards the ‘restructured accounts' in cases where fresh loans have been granted to the borrower. However, a bank may consider restructuring and sanctioning fresh loans without waiting for the actual receipt of the claim. 99N. Interest Subvention / Prompt Repayment Incentive benefits as notified by the Government from time to time shall be made available to the eligible categories of borrowers without any exception. 99O. While extending the relief measures under this Chapter, a bank shall ensure that the relief measures already provided / being provided by GoI / States are duly factored in. 99P. For agricultural loans, where land is taken as security, certificate issued by the Revenue Department officials, in the absence of original title record, shall be accepted for financing to farmers who have lost proof of their title such as title deed or registration certificate issued to registered share-croppers. In the areas covered by the Sixth Schedule of the Constitution, whereby the land is owned by the community, certificate issued by community authorities shall be accepted. C. Reporting Requirements 99Q. Banks shall upload the data on relief measures on a half-yearly basis within 30 days from the end of the half-year (September 30th and March 31st of every year) on the CIMS portal. 99R. In case no relief measures are extended, a ‘NIL’ statement shall be uploaded by the bank.] Chapter V - Government Debt Relief Schemes (DRS) A. Prudential treatment in respect of Government Debt Relief Schemes (DRS): 100. A bank may decide on participating in a particular DRS notified by a Government, based on its Board approved policy, subject to the extant regulatory norms. 101. Any provision of the scheme that may warrant modification in long term interest of the borrowers or for prudential reasons may be duly brought to the notice of the concerned authority/ies through the State Level Bankers’ Committee / District level Consultative Committee, during the consultation phase while designing the DRS. 102. A bank shall clearly determine the eventual outstanding that may crystallise in their books in respect of the borrowers proposed to be covered under the DRS, including the accumulated interest in non-performing accounts, by the time the dues are settled under the DRS, to enable the Government to suitably arrange for the extent of fiscal participation. 103. A bank shall ensure that the borrowers to be covered under DRS are selected strictly as per terms of such schemes so as to avoid subsequent non-admission by the authorities on technical grounds. 104. The terms and conditions of the scheme as well as the prudential aspects, including cooling period for extending fresh credit, impact on credit score etc., shall be clearly communicated to the borrowers at the time of obtaining explicit consent from the borrower for availing benefits under a proposed DRS. 105. Any waiver of accrued but unrealised interest and / or sacrifice of principal undertaken by a bank in the borrower accounts of beneficiaries of the DRS, either as part of the implementation of the scheme or subsequent to its implementation, shall be treated as a compromise settlement and shall attract the prudential treatment contained in paragraphs 51 to 65. 106. If the funds received by a bank as part of the DRS covers the entire outstanding dues of the borrower, including principal and interest accrued till the date of receipt of funds by the bank, the same shall lead to extinguishment of borrower’s debt obligations. 107. In cases where the funds received by a bank as part of the scheme are not adequate to cover the entire outstanding dues of the borrower, leading to residual exposure (principal and / or accrued interest), the asset classification of the residual exposure shall be evaluated as per the terms and conditions of the original loan contract. Provided that any changes / modifications to the terms and conditions of the original loan contract in such cases shall be evaluated against the test of restructuring as defined in these Directions and shall attract the prudential treatment therein. 108. Any fresh credit exposure to such borrowers shall be as per the commercial discretion of the bank under relevant internal policy, subject to extant applicable regulations. 109. A bank’s reporting in respect of the borrowers under the scheme to the credit information companies shall be guided by the extant guidelines in this regard. 110. There shall not be creation of any receivable against the Government on account of the DRS and the exposure shall continue to be on the borrower till receipt of funds by the bank. 111. Till receipt of funds, a bank shall continue to apply the prudential norms including prudential norms on income recognition, asset classification and provisioning, and wherever the accounts are non-performing, the bank may pursue recovery measures as per their Board approved policy against such borrowers. 112. The instructions contained in paragraphs 100 to 111 shall apply in respect of DRS notified on or after December 31, 2024 and shall be without prejudice to the instructions on resolution of stressed assets contained in these Directions. 113. In the context of these instructions, a model operating procedure (MOP) has also been shared with the State Governments ( Annex II ) for their consideration while designing and implementing such DRS through a consultative approach, to avoid any non-alignment of expectations of the stakeholders involved, including the Government, lenders, borrowers, etc. 114. In respect of relief measures announced prior to December 31, 2024, any dues pending receipt from Government, for more than 90 days shall attract specific provision of 100 per cent. 115. A bank shall take necessary action and actively follow up with the respective Governments for settlement of dues referred to in paragraph 114. Chapter VI - Special Measures A. Trade Relief Measures 116. To mitigate the burden of debt servicing brought about by trade disruptions caused by global headwinds and to ensure the continuity of viable businesses, banks may extend relief measures to eligible borrowers, as specified under Reserve Bank of India (Trade Relief Measures) Directions, 2025 dated November 14, 2025 . The Directions, inter-alia, include a defined sunset clause for the measures. Chapter VII - Repeal and Other Provisions A. Repeal and saving 117. With the issue of these Directions, the existing directions, instructions, and guidelines relating to Resolution of Stressed Assets as applicable to Urban Co-operative Banks stands repealed, as communicated vide circular DOR.RRC.REC.302/33-01-010/2025-26 dated November 28, 2025 . The directions, instructions and guidelines already repealed vide any of the directions, instructions, and guidelines listed in the above notification shall continue to remain repealed. 118. Notwithstanding such repeal, any action taken or purported to have been taken, or initiated under the repealed Directions, instructions, or guidelines shall continue to be governed by the provisions thereof. All approvals or acknowledgments granted under these repealed lists shall be deemed as governed by these Directions. Further, the repeal of these directions, instructions, or guidelines shall not in any way prejudicially affect: (1) any right, obligation or liability acquired, accrued, or incurred thereunder; (2) any, penalty, forfeiture, or punishment incurred in respect of any contravention committed thereunder; (3) any investigation, legal proceeding, or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture, or punishment as aforesaid; and any such investigation, legal proceedings or remedy may be instituted, continued, or enforced and any such penalty, forfeiture or punishment may be imposed as if those directions, instructions, or guidelines had not been repealed. B. Application of other laws not barred 119. The provisions of these Directions shall be in addition to, and not in derogation of the provisions of any other laws, rules, regulations, or directions, for the time being in force. C. Interpretations 120. For the purpose of giving effect to the provisions of these Directions or in order to remove any difficulties in the application or interpretation of the provisions of these Directions, the Reserve Bank may, if it considers necessary, issue necessary clarifications in respect of any matter covered herein and the interpretation of any provision of these Directions given by the Reserve Bank shall be final and binding. (Vaibhav Chaturvedi) Chief General Manager 1 Inserted with effect from July 1, 2026, vide Reserve Bank of India (Urban Cooperative Banks – Resolution of Stressed Assets) Second Amendment Directions, 2026 . 2 Inserted with effect from July 1, 2026, vide Reserve Bank of India (Urban Cooperative Banks – Resolution of Stressed Assets) Second Amendment Directions, 2026 . 3 Inserted with effect from July 1, 2026, vide Reserve Bank of India (Urban Cooperative Banks – Resolution of Stressed Assets) Second Amendment Directions, 2026 . 4 Deleted with effect from July 1, 2026, vide Reserve Bank of India (Urban Cooperative Banks – Income Recognition, Asset Classification and Provisioning) Amendment Directions, 2026 . 5 Ibid. 6 Ibid. 7 Ibid. 8 Inserted with effect from July 1, 2026, vide Reserve Bank of India (Urban Cooperative Banks – Resolution of Stressed Assets) Second Amendment Directions, 2026 .