On Tuesday, the Reserve Bank of India (RBI) unveiled draft guidelines that govern how regulated entities, including banks and non-banking financial companies (NBFCs), can acquire immovable assets during loan recovery proceedings. These guidelines come into play when loans become non-performing and borrowers fail to repay despite recovery efforts. The proposed framework, titled ‘Prudential Norms on Specified Non-financial Assets Directions’, mandates that lenders dispose of such assets in a controlled, transparent, and time-bound manner to maximize recovery value. The RBI emphasizes that only non-performing exposures, for which other recovery options have been deemed unviable, are eligible for asset acquisition. Furthermore, any asset acquired in this manner will be classified as a “Specified Non-financial Asset” (SNFA). The guidelines also impose a maximum holding period of seven years for these assets and include safeguards to prevent lenders from selling SNFAs back to borrowers or their related parties. Stakeholders are invited to provide comments on the draft until May 26.