Section 9 of the Banking Regulation Act, 1949: Disposal of Non-Banking Assets
Updated: September 13, 2026
Section 9 of the Banking Regulation Act, 1949 restricts the period for which a banking company may hold immovable property that is not required for its own use. Its purpose is to prevent banking companies from indefinitely retaining non-banking immovable assets and to require their disposal within the statutory period, subject to a limited extension by the Reserve Bank of India.
Section 9 at a glance
- The provision overrides Section 6 to the extent stated in Section 9.
- A banking company may retain immovable property required for its own use.
- Other immovable property must ordinarily be disposed of within seven years from acquisition.
- During that seven-year period, the bank may deal or trade in the property only for facilitating its disposal.
- RBI may, in a particular case, extend the seven-year period by a further period not exceeding five years if the extension is in the interests of depositors.
Text of Section 9 - Disposal of non-banking assets
Notwithstanding anything contained in section 6, no banking company shall hold any immovable property howsoever acquired, except such as is required for its own use, for any period exceeding seven years from the acquisition thereof or from the commencement of this Act, whichever is later or any extension of such period as in this section provided, and such property shall be disposed of within such period or extended period, as the case may be:
Provided that the banking company may, within the period of seven years as aforesaid, deal or trade in any such property for the purpose of facilitating the disposal thereof:
Provided further that the Reserve Bank may in any particular case, extend the aforesaid period of seven years by such period not exceeding five years where it is satisfied that such extension would be in the interest of the depositors of the banking company.
Meaning and scope of Section 9
1. What is a non-banking asset for this provision?
In the context of Section 9, the focus is on immovable property held by a banking company that is not required for the bank's own use. RBI reporting instructions also identify real estate acquired in satisfaction of claims, but not yet disposed of as required by Section 9, under the head of non-banking assets.
2. Seven-year holding limit
The general rule is that a banking company cannot retain such immovable property for more than seven years from the date of acquisition. The section therefore places a statutory time limit on the retention of immovable property that does not fall within the bank's own-use exception.
3. Property required for the bank's own use
The restriction does not apply in the same manner to immovable property required for the banking company's own use. Whether a property genuinely falls within this exception depends on its actual banking or operational use and the surrounding facts.
4. Dealing in the property to facilitate disposal
The first proviso permits a bank, during the seven-year period, to deal or trade in the property for the limited purpose of facilitating its disposal. This does not convert the property into an unrestricted trading asset.
5. RBI extension beyond seven years
RBI may extend the seven-year period in a particular case by a further period not exceeding five years. The statutory condition is that RBI must be satisfied that the extension would be in the interest of the depositors of the banking company. RBI's published regulatory-approval information accordingly refers to approvals for holding non-banking assets beyond seven years and up to twelve years.
| Issue | Rule under Section 9 |
|---|---|
| Property covered | Immovable property held by a banking company, except property required for its own use. |
| Normal maximum holding period | Seven years from acquisition, subject to the statutory wording and any valid extension. |
| Permitted dealing during the period | Dealing or trading for the purpose of facilitating disposal. |
| Extension authority | Reserve Bank of India. |
| Maximum additional extension | Up to five years in a particular case. |
| Condition for extension | RBI must be satisfied that the extension is in the interest of depositors. |
Relationship with Section 6 of the Banking Regulation Act
Section 9 begins with a non-obstante clause: "Notwithstanding anything contained in section 6". Section 6 sets out forms of business in which banking companies may engage. Section 9 nevertheless imposes a specific restriction on the continued holding of immovable property not required for the bank's own use.
For related provisions, see Section 6 - Forms of business in which banking companies may engage and Section 8 - Prohibition of trading.
Practical compliance points
- Record the date and mode of acquisition of every immovable non-banking asset.
- Identify whether the property is actually required for the bank's own use.
- Track the seven-year statutory disposal period from acquisition.
- Where disposal is delayed, consider the need for timely RBI approval before the statutory period expires.
- Maintain records showing why any requested extension would serve depositors' interests.
- Ensure regulatory and financial reporting correctly identifies non-banking assets.
Legislative note
The present proviso structure reflects amendments made by the Banking Laws (Amendment) Act, 1983 (Act 1 of 1984), effective from February 15, 1984.