What changed
RBI issued an updated Master Circular (DNBS (PD) CC No. 154) that consolidates and updates all existing instructions for RNBCs up to June 30, 2009. The circular reaffirms the deposit maturity restrictions: RNBCs cannot accept deposits repayable in less than 12 months or more than 84 months from the date of receipt. It also clarifies that for deposits received in installments, the period is computed from the first installment date.
What it means for you
For RNBCs, this circular is a compliance reminder that deposit tenures must strictly fall between 12 and 84 months. Any deviation could invite regulatory action. Banks dealing with RNBCs should verify that their counterparties adhere to these maturity norms to avoid indirect exposure risks.
What you must do
- Review your RNBC counterparties' deposit products to ensure compliance with the 12-84 month maturity rule.
- Update internal compliance checklists to reference the latest Master Circular (2009) for RNBC due diligence.
- Train relationship managers on the updated RNBC regulatory framework to avoid inadvertent non-compliance.
Who it affects
Residuary Non-Banking Companies (RNBCs), Banks with RNBC as counterparties or deposit holders, RBI supervisory teams monitoring NBFC compliance
What is the minimum and maximum deposit tenure for RNBCs under this circular?
RNBCs cannot accept deposits repayable in less than 12 months or more than 84 months from the date of receipt. For installment-based deposits, the period starts from the first installment.
Does this circular apply to all RNBCs?
Yes, it applies to every residuary non-banking company as defined in the 1987 Directions, which excludes equipment leasing, hire purchase, housing finance, insurance, investment, loan, mutual benefit, and miscellaneous non-banking companies.
What should banks do if they find an RNBC counterparty violating the tenure rule?
Banks should flag the issue to their compliance team and consider reporting to RBI's Department of Non-Banking Supervision, as such violations could indicate broader regulatory risks.