The Reserve Bank of India has amended its 2025 Directions on resolution of stressed assets for non-banking financial companies to introduce prudential norms for specified non-financial assets, defined as immovable assets acquired in full or part satisfaction of claims on a borrower. The new framework clarifies when such assets may be acquired, how they must be valued and presented in the balance sheet, and the conditions for their disposal. Acquisition is permitted only where the NBFC’s exposure to the borrower is classified as non-performing. NBFCs must embed in their policies limits on specified non-financial assets as a share of total assets, eligibility criteria, approval delegation, recovery steps to be explored before acquisition, and a disposal period of no more than seven years. Assets may be acquired only once title has transferred to the NBFC and on a non-recourse basis against full or partial extinguishment of exposure. Partial extinguishment will be treated as restructuring, with the remaining exposure subject to the prudential treatment for restructuring. On acquisition, the asset must be recorded at the lower of the net book value of the extinguished exposure or the distress sale value determined by at least two independent external valuers, and then carried at a revised net book value at each reporting date. Disposal should be pursued at the earliest through public auction following SARFAESI Act auction principles, and the asset cannot be sold back to the borrower or related parties. Specified non-financial assets must be disclosed separately in the balance sheet and excluded from residual exposure, Gross NPA, Net NPA, stressed exposure and provisioning coverage ratio metrics. The new chapter applies to all specified non-financial assets, including those acquired bilaterally or under the SARFAESI Act. The directions take effect on October 1, 2026, and NBFCs must bring legacy specified non-financial assets outstanding as of September 30, 2026 into compliance by September 30, 2027.
Reserve Bank of India2026-07-16
Reserve Bank of India sets prudential norms for NBFC-acquired immovable assets, caps disposal period at seven years
The Reserve Bank of India has introduced prudential norms for immovable assets that NBFCs acquire from borrowers in satisfaction of non-performing exposures. The rules cover policy requirements, valuation, disclosure and disposal, including a maximum holding period of seven years and a ban on selling such assets back to the borrower or related parties. The framework takes effect on October 1, 2026, with legacy holdings to comply by September 30, 2027.