Overview
- The Reserve Bank of India published the Third Amendment Directions in mid‑July that create 'Specified Non‑Financial Assets' and set rules for how banks acquire, value, account for and dispose of immovable collateral.
- The directions say banks may acquire such assets only after the exposure is classified as a non‑performing asset and must record them at the lower of the loan's net book value or a distress sale value set by at least two independent valuers.
- Banks are barred from selling these properties back to the original borrower or related parties, and must make all efforts to sell primarily through public auction with a maximum holding period capped at seven years.
- The rules require a board‑approved SNFA policy covering eligibility, limits, delegation, recovery attempts and disposal timelines, and demand separate disclosure of SNFAs outside gross or net NPA metrics with reporting to the RBI's CIMS portal.
- The directions take effect on October 1, 2026, legacy assets must comply by September 30, 2027, and the RBI rejected requests from lenders for pre‑NPA acquisition, buybacks, inclusion of movable assets and assets with disputed titles.