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NPA provisioning norms in India: rates for banks and NBFCs

By the Bucketwise team · 8 min read · Updated 13 November 2026

Once a loan is classified, the regulator decides how much the lender must set aside against it. This guide lists the rates for banks and for NBFCs side by side, shows one loan under both sets of rules, and gives a query that applies them.

Read this first

The rates below come from two sets of RBI directions, both dated 28 November 2025: the Commercial Banks directions (RBI/DOR/2025-26/164) and the NBFC directions (RBI/DOR/2025-26/356). We read them on 7 November 2026. The bank directions carried amendments up to 1 October 2026 when we checked.

Rates change and have exceptions. Before you put a rate in a model or a report, read the paragraph in the current text. The Sources section at the end links to both.

Classification comes first. The categories and the 90-day rule are in the NPA classification guide.

What are the provisioning rates for banks?

There are more rows than these. Infrastructure loans, teaser-rate housing loans, project finance and unhedged foreign currency borrowers each have their own rule. A table this short cannot hold them, and the query further down leaves them out.

What are the provisioning rates for NBFCs?

Three things differ from the bank table. The sub-standard rate is 10%, not 15%. The secured part of a doubtful asset is provided at 20%, 30% and 50% instead of 25%, 40% and 100%. And the rules depend on the NBFC's layer.

Base layer NBFCs have their own paragraphs for the overdue test and the sub-standard period, in a separate chapter of the directions. Microfinance portfolios and restructured advances also have their own rules. Read the part that applies to your layer.

Ind AS NBFCs and the prudential floor

An NBFC that follows Ind AS holds an impairment allowance under Ind AS 109. The classification and provisioning in the RBI directions then act as a floor. If the Ind AS allowance is lower than the floor, the difference is moved from net profit to an impairment reserve. That reserve is not counted in regulatory capital, and drawing on it needs prior permission from RBI's Department of Supervision.

The expected credit loss guide covers the Ind AS side.

One loan under both sets of rules

Same loan, same security, 6 crore apart. The difference comes from the rate on the secured portion alone. For a sub-standard loan of 100 crore the bank rate gives 15 crore, or 25 crore if it is unsecured, and the NBFC rate gives 10 crore.

How do you apply the rates in SQL?

This query assumes one row per NPA with the category, the outstanding amount, the secured value (the part of the outstanding covered by realisable security, never more than the outstanding), the months the loan has spent as doubtful, and a flag for unsecured exposure. It applies the bank rates from the table above. For an NBFC, change 0.15 to 0.10, drop the unsecured line, and use 0.20, 0.30 and 0.50.

SELECT loan_id, category, outstanding,
       CASE
         WHEN category = 'Sub-standard' AND is_unsecured = 1 THEN 0.25 * outstanding
         WHEN category = 'Sub-standard'                      THEN 0.15 * outstanding
         WHEN category = 'Doubtful' THEN
              (outstanding - secured_value)
            + secured_value * CASE WHEN months_doubtful <= 12 THEN 0.25
                                   WHEN months_doubtful <= 36 THEN 0.40
                                   ELSE 1.00 END
         WHEN category = 'Loss' THEN outstanding
         ELSE 0
       END AS provision_required
FROM   npa_loans;

Standard assets, infrastructure loans and the other special rows are not in it. Run it on ten loans you can compute by hand before you trust the total, and compare the total with the provision in your finance ledger.

What mistakes should you avoid?

• Applying the secured-portion rate to the whole outstanding. The unsecured part is provided at 100% in both tables.
• Using the bank table for an NBFC, or the other way round.
• Counting time as doubtful from the NPA date. The doubtful bands run from when the asset became doubtful, after the sub-standard period.
• Treating a rate from a blog post, including this one, as final. Check the paragraph.
• Forgetting that standard assets carry a provision too, and that the rate depends on the type of loan.

Sources

• RBI: Commercial Banks, Income Recognition, Asset Classification and Provisioning Directions, 2025
• RBI: Non-Banking Financial Companies, Income Recognition, Asset Classification and Provisioning Directions, 2025

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