RBI (Transfer of Loan Exposures) Master Directions, 2021

RBI has released Master Directions (2021) in the matter of ‘Sale/ Transfer of Loan Exposures’, applicable for all lending Institutions w.e.f. 24/09/2021.

RBI Notification 2021-22/86 dt. 24/09/2021: RBI (Transfer of Loan Exposures) Master Directions, 2021

1. Please refer to the Draft Comprehensive Framework for Sale of Loan Exposures that was released on 08/06/2020 for comments from various stakeholders.

2. Based on the examination of the comments received, the Reserve Bank has issued the Master Direction – Reserve Bank of India (Transfer of Loan Exposures) Directions, 2021, which are enclosed. These directions have been issued in exercise of the powers conferred by the Sections 21 and 35A of the Banking Regulation Act, 1949 read with Section 56 of the Banking Regulation Act, 1949; Chapter IIIB of the Reserve Bank of India Act, 1934; and Sections 30A, 32 and 33 of the National Housing Bank Act, 1987.

3. These directions come into immediate effect replacing the existing instructions on the matter of sale/ transfer of loan exposures. All lending institutions are advised to take necessary steps to ensure compliance with these directions.

Master Direction – Reserve Bank of India (Transfer of Loan Exposures) Directions, 2021

Introduction:

Loan transfers are resorted to by lending institutions for multitude of reasons ranging from liquidity management, rebalancing their exposures or strategic sales. A robust secondary market in loans can be an important mechanism for management of credit exposures by lending institutions and also create additional avenues for raising liquidity. It is therefore necessary to lay down a comprehensive, self-contained set of regulatory guidelines governing transfer of loan exposures. Accordingly, in exercise of the powers conferred by the Sections 21 and 35A of the Banking Regulation Act, 1949 read with Section 56 of the Banking Regulation Act, 1949; Chapter IIIB of the Reserve Bank of India Act, 1934; and Sections 30A, 32 and 33 of the National Housing Bank Act, 1987, the Reserve Bank, being satisfied that it is necessary and expedient in the public interest so to do, hereby issues the directions hereinafter specified. (contd… please refer above Notification)