The Reserve Bank of India (RBI) has introduced significant regulatory changes aimed at strengthening the financial sector's stability and operational integrity. Starting October 1, 2026, banks, small finance banks, and non-banking financial companies (NBFCs) are strictly prohibited from selling repossessed properties—known as specified non-financial assets (SNFAs)—back to the original defaulting borrowers or their related parties. This move is designed to prevent moral hazard and ensure that the recovery process remains transparent and fair. Lenders are now mandated to dispose of these assets primarily through public auctions, following principles established under the SARFAESI Act, with a maximum holding period of seven years.
In addition to these recovery norms, the central bank has released draft guidance on regulatory expectations for data governance. As digital financial services and automated decision-making grow, the RBI aims to ensure that data remains an accurate, secure, and reliable asset. The proposed framework requires regulated entities to establish a board-approved data governance policy that covers the entire data lifecycle, including quality, security, and third-party management. This initiative aligns with the Digital Personal Data Protection Act, 2023, and seeks to mitigate operational and compliance risks across the banking system.
These dual actions reflect the regulator's focus on maintaining credit discipline and modernizing institutional oversight. By barring the resale of assets to defaulters, the RBI aims to close loopholes that could undermine the recovery of bad loans. Simultaneously, the new data governance guidelines emphasize the need for robust internal controls as financial institutions become increasingly reliant on technology. Both sets of regulations underscore a broader push by the central bank to enhance transparency and accountability within India’s financial landscape.