On July 16, 2026, the Reserve Bank of India (‘RBI’) issued the RBI (Non-Banking Financial Companies – Resolution of Stressed Assets) Second Amendment Directions, 2026 and the RBI (Commercial Banks – Resolution of Stressed Assets) Third Amendment Directions, 2026, introducing prudential norms for certain immovable assets acquired by non-banking financial companies (‘NBFCs’)/banks, effective October 1, 2026. A ‘Specified Non-Financial Asset’ (‘SNFA’) is defined as an immovable asset acquired by an NBFC/bank in full or part satisfaction of its claims on a borrower, whether bilaterally or under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’).

Key features include:

i.     NBFCs/banks must include in their board-approved policy on SNFA acquisition and disposal, inter alia, a limit on SNFAs as a share of total assets, eligibility criteria, a delegation matrix, recovery efforts to be explored before acquisition, and a maximum disposal period not exceeding seven years;

ii.   an SNFA may be acquired only where the exposure to the borrower is classified as non-performing, and is deemed acquired only once title is transferred to the NBFC/bank and it can deal with the asset independently. Partial extinguishment of exposure will be treated as restructuring;

iii.   on acquisition, an SNFA must be recorded at the lower of: (a) the net book value of the extinguished exposure; and (b) its distress sale value, determined by at least two independent external valuers;

iv.    SNFAs should be disposed of at the earliest through public auction, following SARFAESI Act auction principles, and cannot be sold back to the borrower or its related parties (as defined under the Insolvency and Bankruptcy Code, 2016); and

v.     SNFAs outstanding as on September 30, 2026 must be brought into compliance by September 30, 2027.