RBI requires banks to sell seized properties within 7 years
The Reserve Bank of India (RBI) has rolled out new rules for banks on what to do with properties they take over from unpaid loans.
Starting October 2026, banks need clear policies (approved by their boards) for how they buy, value, and sell these assets.
The big point? Banks can't just keep these places sitting around. They have to sell them off within seven years.
Public auctions encouraged and defaulters barred
Banks are encouraged to use public auctions so everyone gets a fair shot at buying.
And there's a strict no-go: seized properties can't be sold back to the original defaulters or their close connections.
The RBI says this keeps things honest and helps maintain discipline in lending.
For pricing, banks have to pick whichever is lower (the loan's leftover value or what two outside experts say it's worth at a distress sale) but only after legal ownership shifts to the bank.
Borrowers' rights under laws like SARFAESI stay protected until then.