The theory of resistive ballooning modes relevant to the banana-plateau collisionality regime is studied using the recently developed neoclassical magnetohydrodynamics equations. Employing the ballooning mode formulation and a multiple length scale analysis, a generalized set of poloidal flux surface-averaged equations coupling the parallel ion flow velocity V∥i, the vector potential A∥, and the electrostatic potential φ are derived. A particularly simple case in which the parallel sound wave coupling reduces the order of the differential equation in the frequency range ‖ω‖≫ωs, where ωs=scs/qR0, s is the shear parameter, cs is the sound speed, and qR0 is the connection length, is dealt with. The calculations show that a new class of localized pressure-gradient-driven ballooning modes with growth rates varying as (νe+μe)1/2 is possible, where νe is the electron collision frequency and μe is the electron neoclassical poloidal flow viscous damping frequency. It is shown that the resistive ballooning modes are sensitive to variations of a parameter η (=‖d ln P0/d ln q‖) within the tokamak plasma. The enhanced ion polarization and pinch type currents are found to cause stabilization of resistive modes. Further, our model highlights a smooth transition from the Pfirsch–Schlüter to the (neoclassical) banana-plateau collisionality regimes. The relevance of these results to ISX-B experiments [Phys. Rev. Lett. 50, 503 (1983)] is briefly pointed out.