Context: The Reserve Bank of India (RBI) has introduced the Specified Non-Financial Assets (SNFA) category under the amended Commercial Banks- Resolution of Stressed Assets Directions, 2025. The framework regulates how banks acquire, value, manage, and dispose of immovable assets obtained from defaulting borrowers while prohibiting their resale to the original defaulter or related parties.
Explanation
- Specified Non-Financial Assets (SNFA) are immovable properties acquired by banks from borrowers after loan default to settle outstanding dues.
- SNFAs can be acquired only after a loan is classified as a Non-Performing Asset (NPA).
- Disposal of SNFAs must primarily be through public auctions following SARFAESI Act, 2002 principles.
- Banks are prohibited from selling these assets back to the original borrower or related parties.
- NPA is a loan where interest or principal remains overdue for more than 90 days.
- RBI mandates conservative valuation, provisioning, and risk management to ensure transparency and financial stability.
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Stressed Asset Resolution and Specified Non-Financial Assets