{"id":113547,"date":"2026-07-17T11:09:43","date_gmt":"2026-07-17T05:39:43","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=113547"},"modified":"2026-07-17T11:12:15","modified_gmt":"2026-07-17T05:42:15","slug":"rbis-new-snfa-framework","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/rbis-new-snfa-framework\/","title":{"rendered":"RBI\u2019s New SNFA Framework &#8211; Explained"},"content":{"rendered":"<h2 style=\"text-align: justify;\"><strong>SNFA Network Latest News<\/strong><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The Reserve Bank of India (RBI) has introduced a new prudential framework for <\/span><b>Specified Non-Financial Assets (SNFAs)<\/b><span style=\"font-weight: 400;\">, prescribing uniform rules for banks acquiring and disposing of immovable assets from defaulting borrowers.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><strong>Specified Non-Financial Assets (SNFAs)<\/strong><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The Specified Non-Financial Asset (SNFA) is a new category introduced by the RBI under the Commercial Banks &#8211; Resolution of Stressed Assets Directions, 2025 (Third Amendment Directions, 2026).<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">SNFAs refer to immovable properties acquired by banks in full or partial settlement of loans that have turned into <strong><a href=\"https:\/\/vajiramandravi.com\/current-affairs\/npa\/\" target=\"_blank\">Non-Performing Assets (NPAs<\/a><\/strong>).<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">These assets are not part of banks&#8217; normal business operations but are acquired as a recovery mechanism when borrowers fail to repay loans.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Examples of SNFAs<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Residential buildings<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Commercial properties<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Industrial land<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Warehouses<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Other immovable assets were transferred to banks in settlement of outstanding loans.\u00a0<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><strong>Need for the New Framework<\/strong><\/h2>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Banks occasionally acquire immovable properties while recovering bad loans. However, the absence of a comprehensive regulatory framework resulted in:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Inconsistent valuation practices<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Prolonged holding of non-core assets<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Lack of transparency in disposal<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Divergent accounting treatment across banks<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The new framework seeks to ensure that banks focus on banking activities rather than real estate ownership, while improving recovery, governance, and financial reporting.<\/span><\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><strong>Key Features of the RBI&#8217;s SNFA Framework<\/strong><\/h2>\n<ul>\n<li><b>Eligibility for Acquisition<\/b>\n<ul>\n<li aria-level=\"2\"><span style=\"font-weight: 400;\">The borrower&#8217;s account has already been classified as a <\/span><span style=\"font-weight: 400;\">Non-Performing Asset<\/span><span style=\"font-weight: 400;\"> (NPA).\u00a0<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The property is transferred through full or partial extinguishment of the outstanding loan.\u00a0<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Where only part of the outstanding loan is settled through transfer of property, the remaining exposure will continue to be treated as a restructured loan, attracting the applicable prudential norms.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The RBI has clarified that an asset will be considered an SNFA only after its legal title has been transferred to the bank.<\/span><\/li>\n<\/ul>\n<\/li>\n<li aria-level=\"1\"><b>Valuation Norms<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">To prevent overvaluation and improve transparency, RBI has prescribed conservative valuation standards.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Every SNFA must be recorded at the <\/span><b>lower<\/b><span style=\"font-weight: 400;\"> of:<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The <\/span><b>net book value<\/b><span style=\"font-weight: 400;\"> of the extinguished loan; or\u00a0<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The <\/span><b>distress sale value<\/b><span style=\"font-weight: 400;\">, determined independently by <\/span><b>at least two external valuers<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/li>\n<li><span style=\"font-weight: 400;\">This approach ensures realistic asset valuation and reduces the possibility of inflated balance sheets.<\/span><\/li>\n<\/ul>\n<\/li>\n<li aria-level=\"1\"><b>Acquisition and Disposal Policy<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">Every commercial bank must formulate a <\/span><b>Board-approved SNFA policy<\/b><span style=\"font-weight: 400;\"> covering:<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Eligibility criteria<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Delegation of approval powers<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Recovery measures before acquisition<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Maximum permissible exposure to SNFAs<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Disposal strategy and timelines<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The policy should ensure that acquisition of immovable assets remains an exceptional recovery measure rather than a regular business activity.<\/span><\/li>\n<\/ul>\n<\/li>\n<li aria-level=\"1\"><b>Time Limit for Disposal<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">The RBI has imposed a strict time limit on banks for holding such assets. Banks must:<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Make all reasonable efforts to dispose of SNFAs <\/span><b>at the earliest<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Complete disposal <\/span><b>within seven years<\/b><span style=\"font-weight: 400;\"> from the date of acquisition.\u00a0<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The objective is to prevent banks from accumulating large portfolios of non-core real estate assets.<\/span><\/li>\n<\/ul>\n<\/li>\n<li aria-level=\"1\"><b>Disposal Through Public Auction<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">The framework provides that disposal should primarily take place through public auction.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Banks must follow the auction principles laid down under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Public auctions are intended to ensure:<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Transparency<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Fair price discovery<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Competitive bidding<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Reduced scope for favouritism<\/span><\/li>\n<\/ul>\n<\/li>\n<li aria-level=\"1\"><b>Restriction on Sale to Borrowers<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">One of the most significant provisions is the prohibition on resale of SNFAs to:<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The original borrower<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Related parties, as defined under the <\/span><b>Insolvency and Bankruptcy Code (IBC), 2016<\/b><\/li>\n<li><span style=\"font-weight: 400;\">The RBI introduced this safeguard to prevent misuse of the recovery process and ensure that defaulting borrowers do not regain ownership of seized assets through indirect arrangements.<\/span><\/li>\n<\/ul>\n<\/li>\n<li aria-level=\"1\"><b>Accounting and Disclosure Norms<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">The RBI has clarified that SNFAs will:<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Not form part of Gross NPAs<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Not form part of Net NPAs<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Not be included in stressed assets<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Not affect the Provisioning Coverage Ratio (PCR)<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Instead, banks must disclose them separately in their balance sheets under:<\/span><\/li>\n<li><span style=\"font-weight: 400;\">&#8220;Non-banking assets acquired in satisfaction of claims.&#8221;<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Banks are also required to submit annual information on SNFAs through the RBI&#8217;s Centralised Information Management System (CIMS), including:<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Number of acquisitions<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Disposals<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Age-wise classification<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Assets retained for own use<\/span><\/li>\n<\/ul>\n<\/li>\n<li aria-level=\"1\"><b>Implementation Timeline<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">The revised framework will come into force on 1 October 2026.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">For legacy SNFAs already held by banks as on 30 September 2026, compliance must be achieved by 30 September 2027.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">This provides banks with a one-year transition period to align existing assets with the new framework.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><strong>Significance of the New Framework<\/strong><\/h2>\n<ul>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The framework is expected to strengthen India&#8217;s banking system by:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Standardising the treatment of immovable assets acquired from defaulters<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Improving transparency in valuation and disposal<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Preventing misuse of repossessed properties<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Enhancing governance and financial reporting<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Encouraging quicker recovery of stressed assets<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Allowing banks to remain focused on their core lending activities rather than managing real estate<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The reforms also complement broader initiatives aimed at strengthening the resolution of stressed assets under the <\/span><a href=\"https:\/\/vajiramandravi.com\/current-affairs\/sarfaesi-act-2002\/\" target=\"_blank\"><b>SARFAESI Act<\/b><\/a><span style=\"font-weight: 400;\">, the <\/span><a href=\"https:\/\/vajiramandravi.com\/current-affairs\/ibc\/\" target=\"_blank\"><b>Insolvency and Bankruptcy Code (IBC)<\/b><\/a><span style=\"font-weight: 400;\">, and RBI&#8217;s prudential regulations.<\/span><\/li>\n<\/ul>\n<p><b>Source:<\/b><strong> <a href=\"https:\/\/indianexpress.com\/article\/business\/rbi-snfa-guidelines-banks-prohibited-selling-seized-assets-defaulting-borrowers-10789937\/\" target=\"_blank\" rel=\"nofollow noopener\">IE<\/a> | <a href=\"https:\/\/www.business-standard.com\/finance\/news\/rbi-asks-banks-to-sell-immovable-assets-from-bad-loans-within-7-years-126071601255_1.html\" target=\"_blank\" rel=\"nofollow noopener\">BS<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>RBI has introduced a prudential SNFA Network, prescribing rules for acquisition, valuation, accounting, and disposal of immovable assets acquired from loan defaulters.<\/p>\n","protected":false},"author":21,"featured_media":113551,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[60,8733,22,59],"class_list":["post-113547","post","type-post","status-publish","format-standard","has-post-thumbnail","category-upsc-mains-current-affairs","tag-mains-articles","tag-snfa-network","tag-upsc-current-affairs","tag-upsc-mains-current-affairs-tag","no-featured-image-padding"],"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/113547","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/21"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=113547"}],"version-history":[{"count":3,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/113547\/revisions"}],"predecessor-version":[{"id":113559,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/113547\/revisions\/113559"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/113551"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=113547"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=113547"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=113547"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}