Master Direction – Reserve Bank of India (Transfer of Loan Exposures) Directions, 2021
The Reserve Bank of India has issued directions for the transfer of loan exposures, applicable to all scheduled commercial banks, including regional rural banks, and all India financial institutions.
Scope and Definitions: The directions cover the transfer of loan exposures, including those that are not in default and stressed loans.
General Conditions: The transferor must be a servicing facility provider, and the transferee must comply with capital adequacy and other prudential norms.
Transfer of Loans not in Default: The transferor must hold the loan for a minimum period, and the transferee must comply with capital adequacy and other prudential norms.
Transfer of Stressed Loans: Additional requirements apply, including the transfer of non-performing assets (NPAs) and stressed loans to asset reconstruction companies. The price discovery method through the Swiss Challenge Method is also outlined.
Disclosures and Reporting: Banks must disclose details of stressed loans transferred during the year, separately for NPAs and special mention accounts (SMAs).
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