The Reserve Bank of India has released third amendment directions for Non-Banking Financial Companies regarding income recognition and asset classification to enhance financial stability.
Amendments for Non-Banking Financial Companies
On July 16, 2026, the RBI issued circular RBI/2026-27/197, which introduces third amendment directions targeting Non-Banking Financial Companies (NBFCs) surrounding income recognition, asset classification, and provisioning standards.
This regulatory update is rooted in the RBI's authority under sections 45JA and 45L of the Banking Regulation Act, emphasizing a structured approach to the management of NBFCs and their assets amid an evolving financial landscape.
The amendments are designed to address the complexities of asset classification within NBFCs, with a goal of promoting healthier financial practices and ensuring rigorous compliance with regulatory standards for income recognition and provisioning.
Practitioners in the financial sector should take proactive measures to familiarize themselves with these amendments, as compliance will be essential for operational continuity and to mitigate risks associated with financial reporting.
Citations
- Reserve Bank of India Directions No. 197 (2026)