The Reserve Bank of India has amended its directions for urban cooperative banks on income recognition, asset classification and provisioning to prescribe how specified non-financial assets acquired under the stressed asset resolution framework must be accounted for. The changes prevent banks from treating accrued but unrealised interest or charges from the extinguished exposure as income when a specified non-financial asset is acquired, and require income and expenses linked to such assets to be recognised only when realised or incurred. Under the amendment, any accrued but unrealised interest and or charges relating to periods before acquisition of a specified non-financial asset cannot be recognised as income on acquisition. If such income has already been recognised for any specified non-financial asset that remains on a bank's books as of September 30, 2026, it must be reversed through the profit and loss account by September 30, 2027, to the extent it remains unrealised on that date. Any income actually received from a specified non-financial asset must be recorded as non-interest or other income in the financial year in which it is realised, while upkeep costs must be recorded in the income statement in the year they are incurred. The amendment takes effect on October 1, 2026.
Reserve Bank of India2026-07-16
Reserve Bank of India amends urban cooperative bank income recognition rules for specified non-financial assets, effective October 1 2026
The Reserve Bank of India has amended urban cooperative bank income recognition rules for specified non-financial assets acquired under the stressed asset resolution framework. Accrued but unrealised interest or charges from the extinguished exposure cannot be booked as income, and any such amounts already recognised for assets outstanding on September 30, 2026 must be reversed by September 30, 2027 if still unrealised. The changes take effect on October 1, 2026.