RBI panel proposes tough regulatory norms for NBFCs

The Reserve Bank of India (RBI) panel has proposed tough norms for Non-Banking Financial Companies (NBFCs) to regulate and supervise them properly going ahead.

The panel has proposed the following main features

  1. Accounting norms applicable to banks may be applied to NBFCs as well.

  2. All NBFCs with assets of over Rs 1,000 crore, whether listed or unlisted, should be made to comply with Clause 49 of SEBI's listing agreement.

  3. NBFCs should have a minimum 12% Tier-I capital adequacy ratio.

  4. Risk weight of 150% for capital market loans and 125% for commercial real estate loans by such NBFCs will be imposed.

  5. The minimum net-owned fund requirement (NOF) for all new NBFCs may be retained to current level of Rs 2 Crore to register with the RBI.

  6. Any transfer of shareholding, direct or indirect, of 25% and above, a change in control, merger or acquisition of any registered NBFC should have prior approval of the RBI.

All these new norms are proposed to improve the regulation and supervisory framework for these NBFCs by the RBI. This will also help manage their risk properly while giving loans or investing the deposited money.