Indian banks have achieved significant progress in asset quality improvement, with gross NPAs declining to 1.73% as of March 2026 from 2.75% at the end of March 2024, according to data provided by the Ministry of Finance. Public Sector Banks (PSBs) have shown particularly strong recovery, with NPAs falling sharply from ₹6.16 lakh crore as of March 31, 2021, to ₹2.45 lakh crore as of March 31, 2026. Private Sector Banks also recorded declines, from ₹2.02 lakh crore in March 2021 to ₹1.26 lakh crore in March 2026, while foreign banks saw their NPAs fall from ₹10,199 crore to ₹3,990 crore during the same period. The government attributes this improvement to sustained efforts and comprehensive reforms in recovery mechanisms.
The Reserve Bank of India has issued comprehensive prudential norms governing how banks should handle immovable properties acquired during bad loan recovery. These rules come into effect from October 1, 2026, addressing everything from property valuation to disposal timelines. The framework applies specifically to banks that acquire borrower properties after default, providing clear guidelines for asset management and disposal. The RBI's new prudential framework for resolution of stressed assets, combined with dedicated Stressed Asset Management Verticals established by PSBs, has created a more effective recovery ecosystem.
Under the new regulations, banks must dispose of acquired immovable assets within the timeline specified in their internal policy, with a maximum period of seven years. The RBI has directed banks to make all efforts to sell these assets at the earliest instead of retaining them for extended periods. The banking regulator specifically requires banks to make all efforts to dispose of acquired immovable properties at the earliest through public auction processes, supporting the broader trend of accelerated asset recovery and balance sheet cleanup.
The RBI has explicitly prohibited banks from selling recovered properties back to borrowers or their related parties. According to the new norms, the central bank considered proposals to allow borrowers to repurchase such properties but decided against the proposal. The RBI stated that allowing such sales could create moral hazard and weaken credit discipline by providing defaulting borrowers with preferential opportunities to reclaim assets. This restriction aligns with the government's policy that NPAs are closed only when full recovery is received or through compromise settlements, with borrowers remaining liable for repayment while banks continue recovery actions.
The Reserve Bank of India has released the draft Guidance on Regulatory Expectations for Data Governance for public comments, applicable to commercial banks, small finance banks, payments banks, local area banks, regional rural banks, urban and rural co-operative banks, all India financial institutions, non-banking financial companies, asset reconstruction companies and credit information companies. The guidance covers comprehensive data governance requirements including data roles and responsibilities, data lifecycle management, data architecture, metadata, data lineage, data classification, data quality management, and third-party arrangements. Comments are invited until August 17, 2026, with the framework designed to support regulated entities in strengthening their data governance framework and ensuring reliability, consistency, availability, and security of data across systems and processes.
