The Reserve Bank of India (RBI) has released new prudential norms for banks, small finance banks (SFBs), and non-banking financial companies (NBFCs), preventing them from reselling specified non-financial assets (SNFAs) obtained during the resolution of troubled loans to defaulting borrowers or their related parties. These guidelines, under the RBI’s Resolution of Stressed Assets Directions 2026, will be effective from October 1, 2026. The RBI clarified that SNFAs, like immovable assets acquired by lenders to settle claims on borrowers, cannot be sold back to the borrower or its associates.
The updated norms define SNFAs as immovable assets acquired by lenders to satisfy their claims on borrowers, especially when the borrower’s exposure has been labeled as a non-performing asset. The rules also mandate that SNFAs, once acquired, must be revalued every two years on a distress sale basis, with any decrease in value immediately reflected in the profit and loss statement. Additionally, banks, SFBs, and NBFCs are required to establish board-approved policies for acquiring and disposing of SNFAs, setting limits on these assets, recovery efforts before acquisition, and a maximum disposal period of seven years.
Furthermore, the RBI instructed lenders to make every effort to auction off these assets through public auctions in line with the SARFAESI Act, 2002. Legacy SNFAs existing as of September 30, 2026, must adhere to the new norms by September 30, 2027. These assets will not be included in Gross NPA, Net NPA, or provisioning coverage ratio but will be disclosed separately in the balance sheets of banks, SFBs, and NBFCs under relevant accounting categories as per regulations and standards.
