RBI Notifies Fresh IRAC Guidelines; Old Framework Replaced with Amendments

The Reserve Bank of India has issued the final Directions on asset classification, provisioning, and income recognition for commercial banks on April 27, 2026. These directions follow the draft framework released on October 7, 2025, which invited stakeholder feedback. After examining the responses, the RBI has incorporated necessary changes and notified the final version along with a feedback statement. Alongside the core Directions, the RBI has also issued 13 amendment directions impacting various prudential and risk management frameworks, and one repeal direction replacing the earlier IRAC norms.

Objective: To streamline and update prudential norms relating to asset classification, provisioning, and income recognition, while ensuring consistency across regulatory frameworks governing commercial banks.

Key Highlights:  Final Directions replace the earlier IRAC framework through a formal repeal direction 13 connected amendment directions issued across key banking regulations

Covers areas such as:

• Resolution of stressed assets.
• Credit risk and capital adequacy.
• Investment portfolio norms.
• Credit facilities and exposure management.
• Financial disclosures and asset-liability management.
• Aims to bring greater clarity, uniformity, and regulatory alignment across banking operations.
• Separate directions for all Indian financial institutions to be issued later.

Outcome: The RBI has formally notified the new regulatory framework, consolidating and updating norms relating to income recognition and asset classification. The changes are prospective and provide banks with a transition window.

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