Archive · 29 Jul 2026
RBI Tightens SNFA Guidelines for Bank Asset Settlements
The Reserve Bank of India (RBI) has made new rules for banks when they take property as payment for bad loans.
These properties are called Specified Non-Financial Assets (SNFAs).
The new rules say banks must be more careful and follow strict guidelines when they take these properties.
They must value the properties properly and sell them through public auctions.
Banks have until October 1 to start following these rules, and they have until September 30, 2027, to make sure all old properties they own follow the new rules.
Experts say this will make things fairer and more transparent, but it might be harder for banks to follow all the new rules.
RBI has tightened governance, valuation, and disposal norms for SNFAs, including properties like land, buildings, and warehouses.
Banks must value SNFAs at the lower of the outstanding loan’s net book value or the asset’s distress sale value, based on assessments by at least two independent external valuers.
SNFAs must be disposed of through public auctions, with sale back to the borrower or related parties prohibited.
The final norms will come into effect from October 1, with a compliance deadline for legacy SNFAs by September 30, 2027.
Experts believe the guidelines bring uniformity and discipline, though they may present challenges for banks in terms of compliance and operational impact.
- Who
- Reserve Bank of India (RBI), Banks, Non-Banking Financial Companies (NBFCs), Housing Finance Companies (HFCs)
- What
- Tightening of governance, valuation, and disposal norms for Specified Non-Financial Assets (SNFAs)
- When
- Effective from October 1, with compliance deadline for legacy SNFAs by September 30, 2027
- Where
- India
- Why
- To bring uniformity, discipline, and transparency in the handling of SNFAs by banks, NBFCs, and HFCs
Banks' Perspective
Experts' Perspective
Compliance and Operational Impact
Banks' Perspective
Banks will need to be more vigilant and selective in accepting assets as part of settlements, which may increase operational workload and costs.
Experts' Perspective
Experts believe the guidelines bring uniformity and discipline, with a one-year transition window being broadly adequate if banks act early.
Valuation and Disposal Norms
Banks' Perspective
Banks may face challenges in complying with the requirement to value assets at the lower of the outstanding loan’s net book value or the asset’s distress sale value.
Experts' Perspective
Experts see the valuation and disposal norms as a positive step towards transparency and uniformity, though it adds operational workload and costs.
- Effective Date
- October 1
- Legacy SNFAs Compliance Deadline
- September 30, 2027
- Holding Period
- 7 years from acquisition date
- Valuation Requirement
- At least two independent external valuers
- Disposal Method
- Public auctions, with sale back to borrower or related parties prohibited