RBI sets 5% provisioning add-on for AIFI calamity restructurings
AIFIs must add 5% provisions for Chapter VI-A resolution plans
RBI
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Change
RBI amended AIFI income-recognition, asset-classification and provisioning directions to require an additional 5% specific provision for borrowers resolved under Chapter VI-A from July 1, 2026.
Why it matters
The amendment adds a provisioning layer for AIFI borrowers covered by Chapter VI-A calamity-resolution plans. AIFIs must book the 5% provision above existing prudential provisions, apply another 5% for each repeated restructuring up to the 100% ceiling, and reverse it only when RBI’s repayment or default-free conditions are met.
Implications
- — AIFI provisioning teams must book an additional 5% specific provision on outstanding debt for each borrower resolved under Chapter VI-A from July 1, 2026.
- — AIFI credit-risk and finance teams must add another 5% provision for each repeated Chapter VI-A restructuring, subject to the 100% ceiling.
- — AIFI provisioning teams must write back the additional provision only after the borrower meets RBI’s repayment or one-year default-free reversal conditions.
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