RBI lists tighter norms for NBFCs

The Reserve Bank of India has proposed stringent guidelines for non-banking finance companies (NBFCs) in order "to address issues relating to regulatory arbitrage and systemic risk".

The central bank wants NBFCs to follow a number of norms specified for banks as there's a strong view that their operations also follow the same pattern.

It has decided that Tier l capital should be raised to 12 per cent for all captive NBFCs (90 per cent and above of total assets are on financing parent company's products/services), and for NBFCs that are into lending to/investment in sensitive sectors like capital market, commodities and real estate, to the extent of 75 per cent or more of their total assets.

The risk weights on exposure to capital market and real estate, for NBFCs in a bank group should be the same as specified for banks, it said.

Further, the risk weights for NBFCs that are not sponsored by banks may be raised to 150 per cent for capital market exposures and 125 per cent for CRE exposures, it said.

Please read our terms of use before posting comments
TERMS OF USE: The views expressed in comments published on indianexpress.com are those of the comment writer's alone. They do not represent the views or opinions of The Indian Express Group or its staff. Comments are automatically posted live; however, indianexpress.com reserves the right to take it down at any time. We also reserve the right not to publish comments that are abusive, obscene, inflammatory, derogatory or defamatory.