pc
nid 92401
May 06, 2026
pthandapani@vixio.com
India
Reserve Bank of India
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1628 charsIndia's Reserve Bank Issues Draft Prudential Norms on Specified Non-financial Assets
On May 5, 2026, the Reserve Bank of India (RBI) issued draft Prudential Norms on Specified Non-financial Assets (SNFA) Directions for public consultation. The directions establish prudential treatment and recovery procedures for non-financial assets acquired by regulated entities (REs) when non-performing exposures are resolved through asset acquisition as collateral security.
The draft directions establish key requirements for SNFA management. Only non-performing exposures where other recovery options have been assessed as unviable are eligible for extinguishment. REs may acquire SNFAs in full or partial extinguishment of borrower claims; partial extinguishment results in residual exposure being treated as restructured and subject to applicable prudential requirements. SNFAs must be recorded at the lower of Net Book Value (NBV) of the extinguished exposure or distress sale value, with subsequent revaluation at each reporting date using the lower of last available distress sale value or revised NBV net of notional provisions. A maximum holding period of seven years is prescribed to ensure timely disposal. To mitigate moral hazard, REs are prohibited from selling SNFAs back to the borrower or related parties. REs must disclose SNFA holdings in their balance sheets.
The consultation period closes on May 26, 2026. Stakeholders may submit comments through the Connect2Regulate section on the RBI's website or by post to the Chief General Manager, Credit Risk Group, Department of Regulation, Central Office, Reserve Bank of India, 12th/13th Floor, Shahid Bhagat Singh Marg, Fort, Mumbai 400 001, or by email.
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1807 charsReserve Bank of India Seeks Feedback on Draft Prudential Norms on Specified Non-financial Assets
The Reserve Bank of India (RBI) is seeking feedback on the draft Reserve Bank of India (prudential norms on specified non-financial assets (SNFA)) directions, 2026.
The directions prescribe:
SNFA definition and policy framework defining a specified non-financial asset (SNFA) as an immovable asset acquired in satisfaction of claims on a borrower, and mandating that regulated entities (REs) establish policies detailing acquisition limits, eligibility criteria, and maximum disposal periods, stipulating that SNFAs may only be acquired for non-performing exposures where other recovery means are unviable.
Valuation norms requiring SNFAs to be recorded upon acquisition 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 mandating revaluation at least once every two years on a distress sale basis where valuation gains are ignored but diminutions in value are immediately recognized in the profit and loss statement.
Disposal and income recognition stipulating that accrued but unrealized interest prior to acquisition shall not be recognized as income, and requiring REs to make demonstrable efforts to dispose of the SNFA at the earliest through public auction, subject to a maximum period of seven years, while explicitly prohibiting the sale of the asset back to the borrower or their related parties.
Disclosure requirements mandating that SNFAs shall not be included in the total stock of residual exposure, gross/net non-performing assets (NPA), or provisioning coverage ratio, but must instead be disclosed under relevant accounting heads like 'Specified Non-Financial Assets' and reported in the CIMS portal.
Feedback may be submitted via the RBI's Connect2Regulate portal by May 22, 2026.