Reserve Bank of India (Non-Banking Financial Companies - Transfer and Distribution of Credit Risk) Directions, 2025 (Updated as on July 01, 2026)
UR
- Applies toFinance companies
- StatusIn force
- IssuedNov 28, 2025
- Amendmentsnone tracked
- Length88 points in 5 sections · 9 min read
The four dates on this rule
- PublishedNov 28, 2025The day RBI put this document out. This is the same day as the Issued date on this rule.
- Starts to applyNov 28, 2025The day this rule starts to apply, as RBI's own text states it.
- Time to get readyNoneIt starts to apply on the day it was published.
- Last date to actNot statedNo date to act by was found in this document. Other dates may sit inside single paragraphs.
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86 of the 88 points name no product and bind every product. All products.
Numbers to remember
| hundred crore rupees | A stressed loan of one hundred crore rupees or more needs two outside valuation reports. RBI Para 57 |
| twelve months | After selling a stressed loan the company may not lend to that borrower for at least twelve months. RBI Para 61 |
| three per cent | The risk premium used to test a bought stressed loan may not fall below three per cent. RBI Para 71 |
| six months | A stressed loan bought in must be held six months before it can be sold on. RBI Para 74 |
| hundred per cent | Bad loans bought from others carry a full hundred per cent risk weight while they read as standard. RBI Para 77 |
| five per cent | The policy must set the step, not less than five per cent and not more than 15 per cent. RBI Para 89 |
What it says
How firm is each point
Stated by RBI — RBI’s own paragraph says this. We have only made it plainer.
Our reading — BankPulse read RBI’s paragraph and shortened it. The paragraph is the authority, not this line.
Needs judgement — RBI leaves this to the bank to settle, so nobody can give you a fixed number here.
Must know
1. Starts on publication day
The rules start on the day RBI puts them on its own website.
2. Co-lending from January
The co-lending rules in Part B start on 1 January 2026, or earlier if the company chooses.
3. Older deals keep old rules
Co-lending agreements signed before 6 August 2025 stay under the earlier rules.
4. Which finance companies
These rules cover deposit taking, investment and credit, factoring, micro finance and infrastructure finance companies.
5. Six kinds left out
Mortgage guarantee, peer to peer, account aggregator, core investment and primary dealer companies are outside these rules.
6. Nothing else is allowed
A finance company may sell or buy loans only in the ways this book permits.
7. Eight kinds of lender
RBI lists the lenders a finance company may deal with, from commercial banks to other finance companies.
8. Housing finance too
Housing finance companies count as finance companies here, so these rules cover them too.
9. Some may only sell
Regional rural, local area and co-operative banks may only sell stressed loans, and may do nothing else here.
10. Loan participation, no ownership move
In loan participation the seller stays the lender on record and only the money interest moves.
11. The buyer faces the borrower
Under loan participation the buyer's risk is on the borrower, not on the seller.
12. Stressed means overdue or bad
A stressed loan is one already marked as a bad loan or as a special mention account.
13. Terms may not change
Selling a loan must not change the terms the borrower agreed to.
14. No sweetener on a sale
A lender may not offer any credit support or standby money on a loan it sells.
15. No buying it back
A seller may not take back a loan it sold, except under an approved rescue plan.
16. Risk must really move
A sale must move the risk and the reward away at once, as far as the sale goes.
17. The buyer may resell freely
The buyer must be free to sell the loan on, with no condition holding it back.
18. No promise to refund
The seller owes nothing to the buyer later, apart from promises made at the time of sale.
19. Fraud loans may be sold
There is no bar on selling a loan marked as fraud to a permitted buyer.
20. The buyer may change servicer
The buyer must be free to appoint somebody else to service the loans.
21. Pay out only after collecting
The servicer need not pay the buyer before it has itself collected from the borrower.
22. Same underwriting either way
The credit standard used for loans meant for sale must match the standard for loans kept.
23. Unrealised gains cut from capital
Profit on a loan sale that is not yet real is taken out of the company's core capital.
24. Rating cannot replace checking
An outside rating of the pool may be taken, but only after the buyer's own checks.
25. Hundred crore needs two valuers
A stressed loan of one hundred crore rupees or more needs two outside valuation reports.
26. Hundred crore needs an auction
A private deal of one hundred crore rupees or more must be followed by an open auction.
27. Twelve months before returning
After selling a stressed loan the company may not lend to that borrower for at least twelve months.
28. No price that comes back
A stressed loan may not be sold at a price that makes the seller share a later shortfall.
29. New buyer, standard again
A buyer with no earlier dealing with that borrower records the bought stressed loan as standard.
30. Old buyer keeps its grade
A buyer already lending to that borrower must give the bought loan the same grade it already uses.
31. Risk premium floor of three
The risk premium used to test a bought stressed loan may not fall below three per cent.
32. Hold a bought stressed loan
A stressed loan bought in must be held six months before it can be sold on.
33. Staff answerability stays
Selling a bad loan does not end the duty to fix staff accountability for it.
34. Recover cost before profit
Money collected on a bought bad loan pays back the purchase cost before any profit is shown.
35. Full risk weight applies
Bad loans bought from others carry a full hundred per cent risk weight while they read as standard.
36. Below book, take the loss
Selling a stressed loan below its book value means charging the shortfall to profit and loss at once.
37. Above book, wait for cash
A gain above book value may be written back only when the cash is actually received.
38. Ten per cent changes valuing
Holding more than a tenth of the receipts issued against its own sold loan changes how the seller values them.
39. One rupee after the guarantee
A government guaranteed receipt left over after the guarantee ends is valued at one rupee.
40. Unpaid receipts become a loss
Security receipts still unpaid at the end of the resolution period are treated as a loss and fully provided.
41. Never buy back your own
A company may never buy back from a reconstruction company a loan it sold there itself.
42. Beat it by five
The policy must set the step, not less than five per cent and not more than 15 per cent.
BankPulse example. The policy sets the step at 15. A first bid of 200 then makes the mark 230. A rival bid of 220 is below 230, so the first bid wins.
43. How the open auction works
One buyer bids first, others are invited to beat it, and the first buyer may match.
44. Refuse the winner, provide
If the company will not sell to the winning bidder it must provide for the discount that bid showed.
45. Not for consortium lending
These co-lending rules do not cover multiple banking, consortium lending or syndication.
46. Co-lending, defined plainly
Co-lending is two lenders funding one set of loans together, in a share agreed in advance.
47. Keep a tenth yourself
A finance company in a co-lending arrangement must keep at least a tenth of each loan.
48. One blended rate for borrower
The borrower is charged one blended rate, worked out from each lender's rate and share.
49. No hidden loss cover
Fees paid for lending services must not hide any credit support or loss cover.
50. Partner must take its share
The partner lender's promise to take its share of each loan cannot be withdrawn.
51. Missed the window, keep it
If the share is not passed on in time, the loan stays with the company that made it.
52. Five per cent loss cover
The company that makes the loan may cover up to five per cent of co-lent loans against loss.
53. One lender's grade binds both
If one lender calls a co-lent borrower overdue or bad, the other must mark it the same way.
54. Sell a co-lent loan carefully
A co-lent loan may be sold on only under Part A, and only if both lenders agree.
55. Old rules are gone
All earlier RBI rules on this subject for finance companies stand repealed.
Do it
1. The board writes the policy
The board must approve a full written policy for selling and buying loans.
2. Sellers and originators kept apart
The staff who sell loans must report separately from the staff who made them.
3. Ask the borrower first
A sale must not cut across the borrower's rights, and every needed consent must be taken.
4. Tell RBI about swaps
RBI's supervision department must be told whenever a loan is replaced or damages are paid.
5. Servicing on plain market terms
If the seller keeps servicing the loan it must do so at arm's length, on market terms.
6. Keep their money separate
The servicer must hold the buyer's collections in trust and never mix them with its own.
7. Cash only, on the day
A loan sale must be for cash, received no later than the moment the loan moves.
8. Your own staff, own checks
The buyer's own staff must do the credit checks, and this work may not be given outside.
9. Check every single loan
The checks must be done loan by loan, not on the pool as a whole.
10. One third, seller keeps ten
If the buyer checks at least a third of the pool, the seller must keep a tenth of the interest.
11. Watch the loans afterwards
The buyer must keep watching how bought loans perform, and run stress tests on them.
12. Three months, short loans
A loan with a term up to two years may be sold only after three months.
13. Six months, longer loans
A loan with a term over two years may be sold only after six months.
14. Six months after buying
A loan bought from someone else may not be sold on for six months.
15. Borrower by borrower accounts
When a pool of loans is sold, both sides must keep accounts for each borrower.
16. Thirty days to replace
If a promise made at sale turns out wrong, the loan must be swapped back within thirty days.
17. Head office picks the sales
For larger stressed loans the head office itself must take part in choosing what to sell.
18. The board reviews the list
Bad loans above a size the board fixes must be reviewed by the board at set times.
19. Give buyers time to check
The seller must allow prospective buyers enough time to do their own checks.
20. Report every sale
Every loan sale must be reported to the reporting platform RBI names.
21. Keep records until then
Until that platform exists, the company must keep its own record of every sale.
22. Tell the borrower plainly
The loan paper must say upfront which lender does what, and who the borrower should contact.
23. Fifteen days for co-lending
Each lender's share of a co-lent loan must show in its books within fifteen calendar days.
24. Money moves through escrow
All payments between the lenders and the borrower must pass through an escrow account at a bank.
25. Audit covers co-lent loans
Co-lent loans must be inside the internal and statutory audit of each lender.
26. Plan for a break-up
There must be a plan to keep serving borrowers if the co-lending arrangement ends.
27. Next working day, bad news
If one lender marks a co-lent borrower as overdue, the other must be told by the next working day.
28. Show partners on the website
The company must show a list of all its live co-lending partners on its own website.
29. Yearly note in the accounts
Details of co-lending go into the notes to the accounts, once a year at least.
Background
1. Small base layer exempt
A base layer company that meets customers but takes no public funds is also left out.
2. Why selling loans exists
RBI says loan selling spreads credit risk and widens the range of investors who can carry it.
3. Past actions still stand
Anything done under the old rules stays governed by those old rules.
4. This adds to other law
These rules sit on top of other laws and rules, and take nothing away from them.
The same subject for other kinds of institution
The same subject for other kinds of institution.
Other RBI rules for NBFCs
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