New Delhi, July 17 -- The Reserve Bank of India (RBI) has clarified that banks cannot sell immovable properties acquired during loan recovery proceedings back to the defaulting borrower or related parties, citing risks to credit discipline.

The revised prudential norms, issued under the Resolution of Stressed Assets framework, will come into effect from October 1, 2026, providing clearer rules on the treatment and disposal of non-financial assets acquired during recovery proceedings.

Asset Acquisition Only in Exceptional Cases

The central bank noted that banks are generally not expected to hold non-financial assets as part of routine lending. However, in exceptional situations-such as when a loan turns non-performing and recovery measu...