02 August 2024

Starting from FY 2024-25, co-operative banks are required to record provisions for Non-Performing Assets (NPAs) as an expense in the Profit and Loss (P&L) account, in accordance with Accounting Standard (AS) 52. After these provisions are accounted for, any remaining net profits can be allocated to the Bad and Doubtful Debt Reserve (BDDR) if mandated by regulations. To facilitate a smooth transition, banks must identify and quantify BDDR balances as of March 31, 2024, which were previously appropriated from net profits rather than recorded as expenses.

By March 31, 2025, these balances should be adjusted by transferring them to provisions for NPAs and revising regulatory capital accordingly. Excess BDDR balances can be moved to General Reserves or the P&L account. All Primary (Urban), State, and Central Co-operative Banks must adhere to these new guidelines immediately and comply with applicable cooperative society laws.