RBI · Banking Regulation
RBI tightens income recognition rules for UCBs on stressed assets
Urban cooperative banks must reverse unrealised interest on acquired assets by Sep 30, 2027, and recognise SNFA income only on realisation.
What changed
- New rules for income recognition on Specified Non-Financial Assets (SNFA) for urban cooperative banks
- Accrued but unrealised interest before SNFA acquisition cannot be recognised; must be reversed by Sep 30, 2027
- Income from SNFA to be booked as non-interest income only when realised; effective Oct 1, 2026
The read
RBI closed a loophole that let urban cooperative banks book phantom income from stressed assets. Under the new rules, any accrued but unrealised interest on exposures that become Specified Non-Financial Assets must be reversed by September 30, 2027 if still unrealised. Future income from these assets can only be recognised as non-interest income upon actual receipt. The directive, effective October 1, 2026, forces UCBs to align provisioning with reality, curbing a practice that inflated earnings while bad loans festered. The verdict: overdue realism for co-op banks.
Key numbers
- Effective date: October 01, 2026
- Reversal deadline for unrealised income: September 30, 2027
Primary source: rbi.org.in