The Reserve Bank of India has amended its income recognition, asset classification and provisioning directions for local area banks to set accounting treatment when a bank acquires a Specified Non-Financial Asset under the stressed asset resolution framework. Accrued but unrealised interest or charges linked to the extinguished exposure for periods before acquisition cannot be booked as income when the asset is acquired. The amendment also requires any such income already recognised on Specified Non-Financial Assets outstanding in a bank’s books as of September 30, 2026 to be reversed through the profit and loss account by September 30, 2027, to the extent it remains unrealised on that date. Separately, any income received from a Specified Non-Financial Asset must be recognised as non-interest or other income in the financial year in which it is realised, while upkeep costs must be recognised in the financial year in which they are incurred. The changes take effect on October 1, 2026.
Reserve Bank of India2026-07-16
Reserve Bank of India sets local area bank income recognition rules for specified non-financial assets from October 1 2026
The Reserve Bank of India has amended its rules for local area banks to govern income recognition when they acquire Specified Non-Financial Assets. Unrealised pre-acquisition interest or charges cannot be recognised as income, and any such amounts already booked on assets outstanding as of September 30, 2026 must be reversed by September 30, 2027 if still unrealised. The amendment takes effect on October 1, 2026.