RBI lays down Revised Regulatory Framework for NBFCs

New norms for NBFCs
New norms for NBFCs

Please refer to the revised regulatory framework issued vide DNBR (PD) CC.No. 002/ 03.10.001/ 2014-15 dated November 10, 2014 (the circular). At para 14 of the circular it was mentioned that the Notifications in this regard shall follow.

2. In this connection, the following Notifications are enclosed for meticulous compliance

  1. Notification No. DNBR. 007/ CGM (CDS) -2015 dated March 27, 2015 amending the Net Owned Fund requirements.
  1. Non-Systemically Important Non-Banking financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015 issued vide Notification No. DNBR. 008/ CGM (CDS) -2015 dated March 27, 2015.
  1. Systemically Important Non-Banking financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015 issued vide Notification No. DNBR. 009/ CGM (CDS) -2015 dated March 27, 2015.
  1. Notification No. DNBR. 010/ CGM (CDS) -2015 dated March 27, 2015 amending the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998.
  1. Notification No. DNBR. 011/ CGM (CDS) -2015 dated March 27, 2015 amending the Non-Banking Financial (Deposit Accepting or Holding) Prudential Norms (Reserve Bank) Directions, 2007.
  1. Notification No. DNBR. 012/ CGM (CDS) -2015 dated March 27, 2015 amending the Non-Banking Financial Company – Factor (Reserve Bank) Directions, 2012.

3. It may be emphasised that the changes made vide above notifications/ amending notifications are only that corresponding to the circular.

Yours faithfully

(C D Srinivasan)

Chief General Manager

.

RESERVE BANK OF INDIA

DEPARTMENT OF NON-BANKING REGULATION

CENTRAL OFFICE, CENTRE I, WORLD TRADE CENTRE

CUFFE PARADE, COLABA, MUMBAI 400 005

Notification No.DNBR.007/ CGM (CDS) -2015 dated March 27, 2015

In exercise of the powers under clause (b) of sub-section (1) of section 45 –IA of the Reserve Bank of India Act, 1934 (Act 2 of 1934) and all the powers enabling it in that behalf, the Reserve Bank of India, in supersession of Notification No. 132/ CGM (VSNM) -99 dated April 20, 1999, hereby specifies two hundred lakhs rupees as the net owned fund required for a non-banking financial company to commence or carry on the business of non-banking financial institution.

Provided that a non-banking financial company holding a certificate of registration issued by the Reserve Bank of India and having net owned fund of less than two hundred lakhs of rupees, may continue to carry on the business of non-banking financial institution, if such company achieves net owned fund of, -

  1. one hundred lakhs of rupees before April 1, 2016; and
  1. two hundred lakhs of rupees before April 1, 2017

(C D Srinivasan)

Chief General Manager

.

RESERVE BANK OF INDIA

DEPARTMENT OF NON-BANKING REGULATION

CENTRAL OFFICE, CENTRE I, WORLD TRADE CENTRE

CUFFE PARADE, COLABA, MUMBAI 400 005

Notification No.DNBR. 010/ CGM (CDS)-2015 dated March 27, 2015

.

The Reserve Bank of India, having considered it necessary in public interest and being satisfied that, for the purpose of enabling the Bank to regulate the credit system to the advantage of the country, it is necessary to amend the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998 (Notification No. DFC.118/ DG(SPT)-98 dated January 31, 1998) (hereinafter referred to as the said Directions), in exercise of the powers conferred by section 45J, 45K, 45L and 45MA of the Reserve Bank of India Act, 1934 (2 of 1934) and of all the powers enabling it in this behalf, hereby directs that the said Directions shall be amended with immediate effect as follows, namely

1. In paragraph 4,

(i) in sub-paragraph (1), the existing proviso to clause (i), shall be substituted by the following new proviso, namely,-

“Provided that in case of an unrated asset finance company, it shall obtain the minimum investment grade or other specified credit rating on or before March 31, 2016. Those AFCs that do not get a minimum investment grade rating by March 31, 2016, shall not renew existing deposits or accept fresh deposits thereafter. In the intervening period, i.e. till March 31, 2016, unrated Asset Finance Companies or those with a sub-investment grade rating shall only renew the existing deposits on maturity, and shall not accept fresh deposits, till they obtain an investment grade rating”.

(ii) sub-paragraph(4) shall be modified as under

“an asset finance company or a loan company or an investment company

(a) having minimum NOF as stipulated by the Reserve Bank, and

(b) complying with all the prudential norms,

may accept or renew public deposit, together with the amounts remaining outstanding in the books of the company as on the date of acceptance or renewal of such deposit, not exceeding one and one-half times of its NOF.”

“Provided that an asset finance company holding public deposits in excess of the limit of one and one-half times of its NOF shall not renew or accept fresh deposits till such time they reach the revised limit”.

(iii) sub-paragraph (5) shall be modified as under-

“In the event of downgrading of credit rating below the minimum specified investment grade as provided for in paragraph 4(1), a non-banking financial company, being an asset finance company or a loan company or an investment company, shall regularise the excess deposit as provided hereunder;

  1. with immediate effect, stop accepting fresh public deposits and renewing existing deposits;
  1. all existing deposits should runoff to maturity; and
  1. report the position within fifteen working days, to the concerned Regional Office of the Reserve Bank of India where the NBFC is registered.

(C D Srinivasan)

Chief General Manager

 .

RESERVE BANK OF INDIA

DEPARTMENT OF NON-BANKING REGULATION

CENTRAL OFFICE, CENTRE I, WORLD TRADE CENTRE

CUFFE PARADE, COLABA, MUMBAI 400 005

Notification No. DNBR. 011/ CGM (CDS) -2015 dated March 27, 2015

The Reserve Bank of India, having considered it necessary in public interest and being satisfied that, for the purpose of enabling the Bank to regulate the credit system to the advantage of the country, it is necessary to amend the Non-Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007(Notification No.DNBS.192/ DG(VL)-2007 dated February 22, 2007) (hereinafter referred to as the said Directions), in exercise of the powers conferred by section 45JA of the Reserve Bank of India Act, 1934 (2 of 1934) and of all the powers enabling it in this behalf, hereby directs that the said Directions shall be amended with immediate effect as follows

1. In paragraph 2, sub-paragraph (1),-

(A) after clause (iv), the following proviso shall be inserted -

“Provided that the period ‘exceeding 18 months’ stipulated in this clause shall be ‘exceeding 16 months’, for the financial year ending March 31, 2016; ‘exceeding 14 months’, for the financial year ending March 31, 2017 and ‘exceeding 12 months’, for the financial year ending March 31, 2018 and thereafter.”

(B) in clause (xiii),

(i) after sub clause (f), the following proviso shall be inserted, namely,

“Provided that the period of ‘six months or more’ stipulated in sub- clauses (a) to (f) of this clause shall be ‘five months or more’ with for the financial year ending March 31, 2016; ‘four months or more’ for the financial year ending March 31, 2017 and ‘three months or more’ for the financial year ending March 31, 2018 and thereafter.”

(ii) after sub clause (g), the following proviso shall be inserted, namely, -

“Provided that the period of ‘twelve months or more’ stipulated in this sub-clause shall be ‘nine months or more’ for the financial year ending March 31, 2016; ‘six months or more’ for the financial year ending March 31, 2017 and ‘three months or more’, for the financial year ending March 31, 2018 and thereafter.”

(C) in clause (xvi), after sub-clause (a), the following proviso shall be inserted, namely, -

“Provided that the period ‘not exceeding 18 months’ stipulated in this sub-clause shall be ‘not exceeding 16 months’ for the financial year ending March 31, 2016; ‘not exceeding 14 months’ for the financial year ending March 31, 2017 and ‘not exceeding 12 months’ for the financial year ending March 31, 2018 and thereafter”.

2. After paragraph 9A, the following proviso shall be inserted

“Provided that the provision for standard assets shall be 0.30 percent as on March 31, 2016; 0.35 percent as on March 31, 2017; 0.40 percent as on March 31, 2018 and thereafter”.

3. Paragraph 11 shall be omitted.

4. In paragraph 16,

(i) for sub-paragraph (1), the following shall be substituted, namely, -

“(1) Every non-banking financial company shall maintain a minimum capital ratio consisting of Tier I and Tier II capital which shall not be less than 15 percent of its aggregate risk weighted assets on-balance sheet and of risk adjusted value of off-balance sheet items.”.

(ii) for sub-paragraph (2), the following shall be substituted, namely, -

“(2) The total Tier I capital, at any point of time shall not be less than 8.5 percent by March 31, 2016 and 10 percent by March 31, 2017.

5. In paragraph 20, in sub-paragraph (1), the third proviso shall be omitted.

(C D Srinivasan)

Chief General Manager

.

RESERVE BANK OF INDIA

DEPARTMENT OF NON-BANKING REGULATION

CENTRAL OFFICE, CENTRE I, WORLD TRADE CENTRE

CUFFE PARADE, COLABA, MUMBAI 400 005

Notification No.DNBR.012/ CGM (CDS)-2015, dated March 27, 2015

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The Reserve Bank of India, having considered it necessary in the public interest, and being satisfied that, for the purpose of enabling the Reserve Bank to regulate the financial system to the advantage of the country and to prevent the affairs of any Non-Banking Financial Company – Factor (NBFC-Factor) from being conducted in a manner detrimental to the interest of investors or in any manner prejudicial to the interest of such NBFC – Factors, it is necessary to amend the Non-Banking Financial Company – Factor (Reserve Bank) Directions, 2012 (Notification No. DNBS. PD.No.247/ CGM(US)-2012 dated July 23, 2012) in exercise of the powers conferred under Section 3 of the Factoring Regulation Act, 2011, hereby directs that the said Directions shall be amended with immediate effect as follows

  1. For Paragraph 6 following shall be substituted

6. Principal Business

“An NBFC-Factor shall ensure that its financial assets in the factoring business constitute at least 50 per cent of its total assets and the income derived from factoring business is not less than 50 per cent of its gross income”.

(C D Srinivasan)

Chief General Manager

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