RBI Provisioning Norms for NBFCs

Standardized NPA Classification for NBFCs

The Reserve Bank of India (RBI) has announced the standardization of the 90-day Non-Performing Asset (NPA) classification rule across all categories of Non-Banking Financial Companies (NBFCs), effective from 31 March 2026. This new framework also lays out explicit provisioning requirements for both standard and impaired assets.

The RBI's initiative aims to enhance the robustness of NBFCs' financial health by mandating specific provisions based on the classification of assets. This includes clear guidelines for standard, sub-standard, doubtful, and loss assets. Such a detailed classification allows for better risk management and improves investor confidence in the NBFC sector.

Practitioners working with NBFCs must prepare for these changes and ensure that their clients meet the new standards for NPA classification and provisioning. Understanding these norms will be crucial for compliance with RBI regulations and maintaining financial stability in client operations.