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

1. Co-lending from January

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

2. Terms stay unchanged

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

3. No safety nets

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

4. No buying it back

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

5. RBI told of make-goods

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

6. Checks cannot be outsourced

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

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

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

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

10. Two valuers above 100 crore

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

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

12. Twelve months of distance

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

13. Six months both ways

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

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

15. A tenth stays home

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

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

17. Miss it, keep it

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

18. A five per cent guarantee

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

19. News by next day

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

20. Declarations above five crore

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

1. Sellers kept separate

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

2. A clean break

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

3. Partners on the website

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

1. Who is covered

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

2. One rulebook for transfers

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

3. A board policy first

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

4. No promise to refund

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

5. Cash on the day itself

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

6. Paper profit is no capital

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

7. Stressed sales, two ways only

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

8. Buying stressed loans allowed

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

9. A floor under the discount

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

10. Alike loans, one asset

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

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

12. Full risk weight applies

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

13. Unredeemed receipts are losses

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

14. Healed loans may return

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

15. Not with the small banks

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

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

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

18. A blended interest rate

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

19. Money moves through escrow

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

20. One default marks both

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

21. Leaving needs both hands

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

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

23. Old guidance repealed

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

24. Old actions stay governed

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