The Reserve Bank of India (RBI) has announced a proposed framework allowing banks to hold specified non-financial assets (SNFAs) for a maximum of seven years after exhausting all other recovery options. This initiative aims to enhance transparency and efficiency in the recovery process, particularly concerning real estate and non-banking assets, which represent a significant portion of collateral for bank exposures in India. The RBI emphasizes that these assets will not be classified as non-performing assets (NPAs) once acquired, but must be disclosed under relevant accounting heads. To prevent moral hazard, lenders are barred from selling SNFAs back to the original borrowers or related parties. The proposed guidelines require banks to periodically disclose the SNFAs they hold and ensure assets are recorded at the lower of the net book value or distress sale value. This structured approach allows banks to manage stressed exposures outside the formal insolvency framework while maintaining strict valuation and disclosure discipline.