The Reserve Bank of India has amended its 2025 directions on resolution of stressed assets for All India Financial Institutions to introduce prudential norms for specified non-financial assets, defined as immovable assets acquired in full or partial satisfaction of claims on a borrower. The changes clarify when such assets may be acquired, how they must be valued and reported, and the conditions for their disposal. An All India Financial Institution’s policy must now set out 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 that cannot exceed seven years. The framework applies to assets acquired bilaterally or under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Acquisition is permitted only where the institution’s exposure to the borrower is classified as non-performing and where title has transferred to the institution. Assets may be taken over on a non-recourse basis against full or partial extinguishment of exposure, with partial extinguishment treated as restructuring and the remaining exposure subject to the prudential treatment for restructuring. On acquisition, the asset must be booked at the lower of the net book value of the extinguished exposure or its distress sale value based on at least two independent external valuations. Disposal must generally be pursued through public auction in line with SARFAESI auction principles, and the asset cannot be sold back to the borrower or related parties, including after it ceases to be classified as a specified non-financial asset because it is put to the institution’s own use. These assets must also be excluded from Gross NPA, Net NPA and other stressed exposure metrics, disclosed separately in the balance sheet, and reported through the CIMS portal. The amendments take effect on October 1, 2026. For specified non-financial assets already outstanding on an institution’s books as of September 30, 2026, compliance must be achieved by September 30, 2027.
Reserve Bank of India2026-07-16
Reserve Bank of India sets prudential norms for All India Financial Institutions acquiring stressed borrowers’ immovable assets, with a seven year disposal cap
The Reserve Bank of India has introduced prudential rules for immovable assets that All India Financial Institutions acquire from non-performing borrowers in satisfaction of debt. The framework covers acquisition, valuation, disclosure and disposal, including a maximum holding period of seven years and a bar on selling the asset back to the borrower or related parties. It takes effect on October 1, 2026, with legacy holdings to comply by September 30, 2027.