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RBI Bars Loan Defaulters from Buying Back Assets
17 Jul
Summary
- Lenders cannot resell acquired assets to defaulting borrowers.
- New norms effective from October 1, 2026.
- Assets will be disclosed separately, not as NPAs.
The Reserve Bank of India (RBI) has finalized new prudential norms that prohibit lenders from reselling specified non-financial assets (SNFAs) acquired during stressed loan resolutions back to defaulting borrowers or their related parties. These regulations, applicable to commercial banks, small finance banks, and NBFCs, will take effect on October 1, 2026.
An SNFA refers to an immovable asset obtained by a lender in satisfaction of its claims on a borrower. The RBI mandates that lenders must establish board-approved policies for the acquisition and disposal of these assets, with a maximum disposal period of seven years.
These SNFAs will be recorded on the balance sheet at the lower of their net book value or distress sale value. They will not be classified as NPAs but will be disclosed under separate accounting heads. Legacy SNFAs outstanding as of September 30, 2026, must comply with these norms by September 30, 2027.
