MUMBAI: RBI has barred defaulting borrowers from buying back properties acquired by lenders to satisfy a defaulter’s debt, tightening norms for resolution of stressed accounts under its new directions effective Oct 1, 2026.Defaulters and their related parties, as defined under the Insolvency and Bankruptcy Code, 2016, cannot repurchase such assets from any type of bank or finance company. The restriction applies even if the asset is reclassified or used by the lender later.According to the directions, banks must adopt board-approved policies that set caps on specified non-financial assets as a share of total assets, define eligibility criteria, lay out delegation structures and document recovery efforts before acquisition.
The central bank has set conditions for recognising such assets. Banks can record them only after legal title is transferred and when the lender has full control over the asset. Acquisition is limited to accounts already classified as non-performing assets.The norms require banks to dispose of these assets through public auctions under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Act (SARFAESI) principles within seven years. For assets already held as of Sept 30, 2026, banks must comply with the framework by Sept 30, 2027.In case the property is retained by the lender, RBI has also standardised valuation and accounting. Banks must record such assets at the lower of the net book value of the settled loan portion or the distress sale value determined by at least two external valuers. Seized assets must be disclosed separately and cannot be included in gross NPA, net NPA or provisioning coverage ratios.
