The Reserve Bank of India (RBI) has issued a comprehensive prudential framework governing the acquisition and disposal of specified non-financial assets (SNFAs) acquired in satisfaction of stressed loans, tightening safeguards around valuation, ownership and disposal while preventing such assets from returning to defaulting borrowers.The new norms, which will come into effect from October 1, 2026, prohibit banks and non-banking financial companies (NBFCs) from selling acquired stressed assets back to the defaulting borrower, or to any related party connected with the borrower.
Stricter acquisition and disposal norms
Under the framework, lenders will be permitted to acquire specified non-financial assets only from borrowers whose loan accounts have turned non-performing. Such acquisitions can take place only as part of the full or partial extinguishment of outstanding loans on a non-recourse basis.Where only part of the outstanding loan is extinguished through the acquisition of an asset, the remaining exposure will be treated as a restructured loan under RBI norms.The central bank has also capped the maximum holding period for such acquired assets at seven years, requiring lenders to make all reasonable efforts to dispose of them through public auctions. Any sale must broadly follow the auction principles prescribed under the SARFAESI Act to ensure transparency and fair price discovery.Valuation, disclosures and legacy assetsThe RBI has prescribed tighter valuation norms, requiring acquired stressed assets to be recognised at the lower of their net book value or distress sale value. In addition, lenders must obtain valuations from at least two independent external valuers before recognising such assets.The regulator clarified that these acquired assets will not be classified as Gross NPAs, Net NPAs or other stressed assets in regulatory disclosures. Instead, they will be reported separately as non-banking assets acquired in satisfaction of claims. Where lenders deploy such assets for their own business operations, they will subsequently be reclassified as fixed assets.The framework also covers existing holdings, with all legacy specified non-financial assets required to comply with the revised norms by September 30, 2027.The move is aimed at bringing greater consistency, transparency and prudential discipline to the way lenders acquire, value, hold and dispose of stressed non-financial assets, while reducing the risk of such assets finding their way back to the original defaulters.
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