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Directions · Reserve Bank of India

Reserve Bank of India (All India Financial Institutions – Transfer and Distribution of Credit Risk) Directions, 2025

UR

The four dates on this rule

At a glanceThe transfer must separate the seller at once from the risks and rewards, to the extent transferred. These directions apply to the five all India institutions: EXIM Bank, NABARD, SIDBI, NHB and NaBFID. The co-lending part takes effect from January 1, 2026, or any earlier date the institution chooses.

Official RBI page

Numbers to remember

January 1, 2026The co-lending part takes effect from January 1, 2026, or any earlier date the institution chooses. RBI Para 2
10 per centLoan by loan checks may cover only one third of a portfolio. In that case the seller must retain 10 per cent of the interest. RBI Para 40
2 yearsLoans with tenor up to 2 years need three months of holding; longer loans need six months. RBI Para 43(1)
30 daysA warranty replacement of transferred loans must happen within 30 days, on the original terms. RBI Para 52(4)
₹100 croreA stressed exposure of ₹100 crore or more needs two external valuation reports, at the seller's cost. RBI Para 57
12 monthsAfter selling a stressed loan the institution takes no fresh exposure to that borrower for at least 12 months. RBI Para 61
six monthsAcquired stressed loans are held at least six months, and loans sold as stressed within six months are not bought. RBI Para 73
September 24, 2021The gap on legacy security receipts held on September 24, 2021 may be provided over a five-year period. RBI Para 82(2)
15 daysA share not moved within 15 days stays on the originator's own books. RBI Para 113
five per centThe originating institution may guarantee default losses up to five per cent of the co-lent loans outstanding. RBI Para 121
five croreBorrowers with sanctioned limits of rupees five crore and above declare their credit lines from other lenders. RBI Para 126(1)

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. Co-lending from January

RBI Para 2 · Stated by RBI

The co-lending part takes effect from January 1, 2026, or any earlier date the institution chooses.

2. Terms stay unchanged

RBI Para 14 · Our reading

A transfer must not change the loan's terms; any change is tested against the restructuring rules.

3. No safety nets

RBI Para 16(4) · Stated by RBI

Lenders may not offer credit enhancement or liquidity support in any form on loan transfers.

4. No buying it back

RBI Para 17 · Stated by RBI

A seller cannot re-acquire a transferred loan except under an approved resolution plan.

5. RBI told of make-goods

RBI Para 24 · Stated by RBI

Every replacement of a transferred loan, or damages paid, is reported to RBI's supervision department.

6. Checks cannot be outsourced

RBI Para 39 · Stated by RBI

The buyer's own staff must do the due diligence, with the same rigour as for its own loans.

7. A third checked, tenth kept

RBI Para 40 · Stated by RBI

Loan by loan checks may cover only one third of a portfolio. In that case the seller must retain 10 per cent of the interest.

8. Hold before you sell

RBI Para 43(1) · Stated by RBI

Loans with tenor up to 2 years need three months of holding; longer loans need six months.

BankPulse example. A loan with a tenor of up to 2 years must be held for three months before transfer. A loan with a tenor of more than 2 years must be held for six months. So an 18-month loan waits three months, and a 5-year loan waits six.

9. Thirty days to replace

RBI Para 52(4) · Our reading

A warranty replacement of transferred loans must happen within 30 days, on the original terms.

10. Two valuers above 100 crore

RBI Para 57 · Stated by RBI

A stressed exposure of ₹100 crore or more needs two external valuation reports, at the seller's cost.

BankPulse example. A stressed exposure of ₹120 crore is being transferred. Two external valuation reports are needed, because the exposure is ₹100 crore or more. An exposure of ₹90 crore is below ₹100 crore, so this rule does not apply.

11. Open challenge, big sales

RBI Para 60 · Our reading

A bilateral stressed sale of ₹100 crore or more must face a public counter bidding round.

12. Twelve months of distance

RBI Para 61 · Our reading

After selling a stressed loan the institution takes no fresh exposure to that borrower for at least 12 months.

13. Six months both ways

RBI Para 73 · Stated by RBI

Acquired stressed loans are held at least six months, and loans sold as stressed within six months are not bought.

14. Old receipts, five years

RBI Para 82(2) · Our reading

The gap on legacy security receipts held on September 24, 2021 may be provided over a five-year period.

15. A tenth stays home

RBI Para 101 · Our reading

The institution must keep at least a 10 per cent share of each co-lent loan in its own books.

16. Fifteen days to book

RBI Para 111 · Our reading

Each partner's share must reach both partners' books within 15 calendar days of disbursement.

17. Miss it, keep it

RBI Para 113 · Stated by RBI

A share not moved within 15 days stays on the originator's own books.

18. A five per cent guarantee

RBI Para 121 · Stated by RBI

The originating institution may guarantee default losses up to five per cent of the co-lent loans outstanding.

19. News by next day

RBI Para 122 · Our reading

Partners share classification information near real time, and never later than the end of the next working day.

20. Declarations above five crore

RBI Para 126(1) · Stated by RBI

Borrowers with sanctioned limits of rupees five crore and above declare their credit lines from other lenders.

Do it

1. Sellers kept separate

RBI Para 13 · Our reading

Staff who transfer loans must work and report independently of staff who originate them.

2. A clean break

RBI Para 18 · Our reading

The transfer must separate the seller at once from the risks and rewards, to the extent transferred.

3. Partners on the website

RBI Para 124 · Our reading

The institution must list all its active co-lending partners prominently on its website.

Background

1. Who is covered

RBI Para 3 · Our reading

These directions apply to the five all India institutions: EXIM Bank, NABARD, SIDBI, NHB and NaBFID.

2. One rulebook for transfers

RBI Para 8 · Our reading

No loan transfer or acquisition may happen outside what this framework permits.

3. A board policy first

RBI Para 13 · Our reading

A board approved policy sets the standards for due diligence, valuation, systems and oversight.

4. No promise to refund

RBI Para 20 · Our reading

The seller owes no re-purchase, funding or substitution, except for breach of stated warranties.

5. Cash on the day itself

RBI Para 38 · Stated by RBI

Transfers are on cash basis only, with the price received not later than the time of transfer.

6. Paper profit is no capital

RBI Para 45 · Stated by RBI

Unrealised profit on a transfer is deducted from core capital until the loans mature.

7. Stressed sales, two ways only

RBI Para 54 · Stated by RBI

Stressed loans move only by assignment or novation; loan participation is not permitted for them.

8. Buying stressed loans allowed

RBI Para 55(4) · Our reading

Unlike the small banks, these institutions may acquire stressed loans, under a policy with stated objectives.

9. A floor under the discount

RBI Para 57 · Stated by RBI

The internal valuation's discount rate has a floor: the contracted interest rate charged on the loan.

10. Alike loans, one asset

RBI Para 67 · Our reading

A pool of alike personal loans acquired may sit in the books as a single asset. Everything else stays loan by loan.

11. Recover the cost first

RBI Para 75 · Our reading

Cash from an acquired bad loan first repays the acquisition cost; only the excess counts as profit.

12. Full risk weight applies

RBI Para 76 · Stated by RBI

Acquired bad loans carry a 100% risk weight in the institution's capital sums.

13. Unredeemed receipts are losses

RBI Para 84 · Our reading

Security receipts still unredeemed at the end of the resolution period are treated as loss assets, fully provided.

14. Healed loans may return

RBI Para 86 · Our reading

Standard accounts that recovered under an ARC's resolution plan may be taken over after the monitoring period.

15. Not with the small banks

RBI Para 96(1) · Stated by RBI

Co-lending partners are commercial banks excluding small finance, local area and regional rural banks, all India financial institutions and NBFCs.

16. Co-lending, defined

RBI Para 100 · Stated by RBI

Co-lending is a pre-agreed joint funding of a loan portfolio by two regulated lenders, sharing revenue and risk.

17. One face to the borrower

RBI Para 104 · Our reading

The loan agreement discloses upfront who does what and names the single point of contact for the customer.

18. A blended interest rate

RBI Para 106 · Our reading

The borrower pays one blended rate averaged from the partner lenders' own rates.

19. Money moves through escrow

RBI Para 115 · Our reading

Every disbursement and repayment routes through an escrow account with an all India financial institution.

20. One default marks both

RBI Para 122 · Our reading

If either partner marks the borrower as stressed, the other partner's share carries the same mark.

21. Leaving needs both hands

RBI Para 123 · Our reading

A co-lent loan may go to a third party only with the consent of both partners, under the transfer rules.

22. Sharing borrower information

RBI Para 126(2) · Stated by RBI

Lenders in consortium arrangements exchange borrower conduct information at least quarterly.

23. Old guidance repealed

RBI Para 128 · Stated by RBI

The earlier credit risk transfer guidance for these institutions stands repealed.

24. Old actions stay governed

RBI Para 129 · Our reading

Action already taken under the old rules stays governed by them.

The same subject for other kinds of institution

The same subject for other kinds of institution.

Other RBI rules for all India financial institutions

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