The RBI has issued Second Amendment Directions for Small Finance Banks, updating protocols on income recognition and asset classification.
Small Finance Banks Undergo Income Recognition Guidelines Amendment
On July 16, 2026, the Reserve Bank of India (RBI) released the RBI/2026-27/196 announcement, indicating the Second Amendment Directions for Small Finance Banks focusing on income recognition, asset classification, and provisioning. This amendment is part of the RBI's commitment to maintaining financial discipline across all sectors of banking.
This regulatory update draws upon the authority provided by sections 21 and 35A of the Banking Regulation Act, aiming to enhance the financial reporting standards and risk management practices among Small Finance Banks, particularly in light of fluctuating asset quality concerns.
Banking professionals and compliance officers in Small Finance Banks must ensure that their institutions align with these latest directions to enhance operational soundness and mitigate potential risks associated with asset classification.
Citations
- RBI Directions No. 196 (2026)