The Reserve Bank of India (RBI) has rejigged the rules governing classification of bad loans, definition, and recovery, to align with globally-accepted standards, effective April 1, 2027, according to the Master Directions released on Monday (April 27, 2026).

“These Directions are intended to further strengthen credit risk management practices, improve comparability across regulated entities, and align the regulatory framework more closely with internationally accepted financial reporting principles,” the central bank said in its Master Directions.