The Reserve Bank of India (RBI), on November 28, 2025, issued the Reserve Bank of India (Urban Co-operative Banks- Transfer and Distribution of Credit Risk) Directions, 2025.
The following has been stated:-
• The bank shall put in place a comprehensive Board-approved policy for the transfer and acquisition of loan exposures under these guidelines. These guidelines must, inter alia, lay down the minimum quantitative and qualitative standards relating to due diligence, valuation, requisite IT systems for capture, storage, and management of data, risk management, periodic Board-level oversight, etc. Further, the policy must also ensure independence of functioning and reporting responsibilities of the units and personnel involved in transfer/acquisition of loans from those of personnel involved in originating the loans. All transactions must meet the requirements as detailed in the policy.
• Loan transfers should result in the transfer of economic interest without being accompanied by any change in underlying terms and conditions of the loan contract. In all cases, if there are any modifications to terms and conditions of the loan contract during and after transfer (e.g., in take-out financing), the same shall be evaluated against restructuring as defined in Reserve Bank of India (Urban Cooperative Banks– Resolution of Stressed Assets) Directions, 2025.
• Lenders referred to in Paragraph 12(4), regardless of whether they are transferors or otherwise, should not offer credit enhancements or liquidity facilities in any form in the case of loan transfers.
• A loan transfer should result in immediate separation of the transferor from the risks and rewards associated with loans to the extent that the economic interest has been transferred.
[Notification no. RBI/DOR/2025-26/282 DOR.STR.REC.201/21.04.048/2025-26]
