The Reserve Bank of India (RBI) on September 24, 2021 has issued the Reserve Bank of India (Transfer of Loan Exposures) Directions, 2021.
The following is the applicability of the directions:
• The provisions of these directions shall apply to the following entities (collectively referred to as lenders in these directions), unless specified otherwise:
1. Scheduled Commercial Banks.
2. Regional Rural Banks.
3. Primary (Urban) Co-operative Banks/State Co-operative Banks/District Central Co-operative Banks.
4. All India Financial Institutions (NABARD, NHB, EXIM Bank, and SIDBI).
5. Small Finance Banks.
6. All Non-Banking Finance Companies (NBFCs) including Housing Finance Companies (HFCs).
• No lender shall undertake any loan transfers or acquisitions other than those permitted under these directions and in the manner prescribed therein.
• These directions will be applicable to all loan transfers undertaken by the lenders as mentioned in Clause 3, including sale of loans through novation or assignment, and loan participation.
• These directions shall apply only to lenders mentioned in Clause 3 as transferor(s) or transferee(s) in loan transfers, unless specifically made applicable to other categories of entities as transferee(s) as per the specific permissions as per Clauses 54 and 58.
• NBFCs which are required to comply with Indian Accounting Standards (IndAS) shall continue to be guided by the Standards and the advisories issued by the Institute of Chartered Accountants of India (ICAI Advisories) in case of any inconsistencies between these directions and the Standards.
• In respect of transferee(s) other than lenders mentioned in Clause 3 and Asset Reconstruction Companies (ARCs), which are also financial sector entities, the prudential norms, including asset classification and provisioning post the transfer shall be as per the respective regulatory frameworks laid down by the respective financial sectoral regulators, viz., Securities and Exchange Board of India, Insurance Regulatory and Development Authority of India, Pension Fund Regulatory and Development Authority, and International Financial Services Centres Authority.
[Notification No. DOR.STR.REC.51/21.04.048/2021-22]
