NEWS: The Reserve Bank of India (RBI) has introduced Specified Non-Financial Assets (SNFA) Rules to standardise the acquisition, valuation, management, and disposal of repossessed immovable properties by lenders.

ABOUT

• SNFAs are immovable properties (e.g., land, residential houses, commercial buildings) repossessed by banks from defaulting borrowers to recover unpaid loans.
• Applicable after a borrower's account is classified as a Non-Performing Asset (NPA).

KEY PROVISIONS

• Banks can take possession only after the loan becomes an NPA.
• Repossessed properties cannot be sold back to the original borrower or related parties.
• Assets must be disposed of within 7 years, primarily through public auctions.

Properties are valued at the lower of:

• Net book value of the loan, or
• Distress sale value (determined by two independent external valuers).
• SNFAs will be reported separately as "Non-banking assets acquired in satisfaction of claims" and will not be included in gross or net NPA figures.
• Banks must adopt a Board-approved policy and report all SNFA transactions annually through the Centralised Information Management System (CIMS) portal.