RBI Asks ICICI Bank to Provide Additional Provisions for Agri PSL Loans

The Reserve Bank of India (RBI) has instructed ICICI Bank to make additional provisions of ₹1,283 crore on select agricultural loans under the Priority Sector Lending (PSL) classification. This action follows the central bank’s annual supervisory review. 

RBI Mandates Additional Provisioning of ₹1,283 Crore 

As part of its regular annual supervisory process, RBI found that certain agricultural loans in ICICI Bank’s PSL portfolio did not fully align with classification requirements.  

While these credit facilities remain standard with no signs of stress, the bank was directed to make extra standard asset provisions amounting to ₹1,283 crore during the December quarter of FY26. 

According to ICICI Bank, this provisioning is purely regulatory in nature and unrelated to borrower repayment behaviour or asset quality. The classification issue pertains to loan terms, not the creditworthiness of borrowers. 

Portfolio Covers Loans Originated Since 2012 

The affected portfolio includes agricultural loans originated since 2012 and forms part of ICICI Bank’s rural book of approximately ₹83,000 crore.  

The PSL loan segment under review totals ₹20,000–25,000 crore. The bank clarified these loans are secured and have historically been treated as standard assets in its accounting records. 

Read More: RBI Grants In-Principle Approval to SMBC for Wholly Owned India Subsidiary! 

Provisioning Seen as a One-Time Adjustment 

ICICI Bank classified the provisioning as a one-time regulatory adjustment and does not anticipate additional related provisions beyond Q3 FY26.  

The provisioned amount is expected to remain until the affected loans are either repaid or renewed under updated PSL-compliant terms.  

Management noted the regulatory adjustment reduced Q3 FY26 profitability but confirmed adequate buffers, including ₹13,100 crore in contingency reserves, are in place. 

Conclusion 

The RBI’s direction to ICICI Bank to provision ₹1,283 crore relates to compliance with classification guidelines for agricultural PSL loans. The bank maintains that borrower quality remains intact, and the provisioning is a procedural requirement rather than an indicator of asset deterioration. 

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