Reserve Bank of India - Notification No. 299-2014-15 - Revised Regulatory Framework for Non-Banking Financial Company (NBFC)

The Non-Banking Finance Company (NBFC) sector has evolved considerably in terms of its size, operations, technological sophistication, and entry into newer areas of financial services and products. Being financial entities, they are as exposed to risks arising out of counter party failures, funding and asset concentration, interest rate movement and risks pertaining to liquidity and solvency, as any other financial sector player. There is therefore, a felt need to address the risks, without impeding the dynamism displayed by NBFCs in delivering innovation and last mile connectivity for meeting the credit needs of the productive sectors of the economy.

With the above background, a review of the entire regulatory framework for the NBFC sector has been undertaken. Certain important recommendations and changes are now introduced to the regulatory framework, and cover the following topics:

1. Requirement of Minimum Net Owned Fund (NOF) of Rs. 200 lakh
2. Deposit Acceptance
3. Systemic Significance
4. Multiple NBFCs
5. Prudential Norms
6. Prudential Regulations Applicable to Non-Deposit taking NBFCs (NBFCs-ND) with Assets less than Rs. 500 crore
7. Prudential Regulations Applicable to Non–Deposit Taking Systemically Important NBFCs (NBFCs-ND-SI) (asset of Rs. 500 crore and above) and all NBFCs-D
8. Asset Classification
9. Provisioning for Standard Assets
10. Credit / Investment Concentration Norms for Asset Finance Companys (AFCs)
11. Corporate Governance and Disclosure norms for NBFCs
12. Board Committees
13. Fit and Proper Criteria for Directors
14. Disclosures in Financial Statements – Notes to Account
15. Off-Site Reporting
16. Exemptions
17. Application of Other Laws not Barred

Document Details

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Monday, November 10, 2014
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Reserve Bank of India
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