What changed
RBI extended the timeline for large non-deposit taking NBFCs to achieve higher Capital to Risk-Weighted Assets Ratio (CRAR). The 12% CRAR deadline was moved to March 31, 2010, and the 15% CRAR deadline to March 31, 2011, as per the April 2009 annual policy statement.
What it means for you
NBFCs with asset size of Rs 100 crore and above get breathing room to strengthen capital buffers without immediate compliance pressure. Banks lending to or investing in these NBFCs should note the extended transition period, which may affect credit risk assessments and provisioning timelines.
What you must do
- Update internal credit risk models to reflect the extended CRAR deadlines for large NBFC borrowers.
- Review exposure limits and covenants for NBFCs with assets over Rs 100 crore to align with the new compliance schedule.
- Monitor NBFC capital adequacy progress at each reporting date to ensure they are on track for the 2010 and 2011 targets.
Who it affects
Non-deposit taking NBFCs with asset size of Rs 100 crore and above, Banks with exposure to large NBFCs, RBI supervisory teams monitoring NBFC compliance
Which NBFCs are covered by this circular?
All non-deposit taking NBFCs with asset size of Rs 100 crore and above are covered.
What are the new CRAR deadlines?
The 12% CRAR must be achieved by March 31, 2010, and the 15% CRAR by March 31, 2011.
Does this circular apply to deposit-taking NBFCs?
No, it specifically applies only to non-deposit taking NBFCs with the specified asset threshold.