The Reserve Bank of India has introduced a new classification called Special Non-Financial Assets (SNFA) and has prohibited banks from selling acquired stressed assets back to the borrowers from whom those assets were taken. The regulatory change is meant to improve recovery discipline and prevent circular transactions that can weaken resolution outcomes.
The move matters because distressed-asset resolution in India often depends on the quality of sale, valuation, and post-acquisition discipline. By blocking resale to the original defaulter, the Reserve Bank of India is trying to reduce the scope for repeated rollbacks and preserve the integrity of asset sales.
Why the Reserve Bank of India acted
Banking regulators usually seek faster and cleaner resolution of stressed assets so that bad loans do not remain trapped on balance sheets. A rule that prevents a bank from buying and then quietly returning an asset to the same borrower is intended to discourage cosmetic recovery and force a genuine change in ownership or control.
What changed now
The new rules do two things:
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