What changed
RBI issued a master circular consolidating all instructions issued exclusively to NBFC-ND-SI during the year ended June 30, 2010, to have all current instructions in one place. The circular also references earlier modifications from December 2006, including the definition of NBFC-ND-SI as those with asset size of Rs. 100 crore or more, and phased CRAR requirements of 10% initially, 12% by March 31, 2010 and 15% by March 31, 2011.
What it means for you
NBFC-ND-SIs must ensure compliance with the consolidated instructions, particularly the higher capital adequacy ratios and exposure norms. The circular provides a single reference point for all regulatory requirements, reducing ambiguity. Asset Finance Companies get additional flexibility to exceed single/group exposure limits by up to 5% of owned fund with board approval.
What you must do
- Review and align your NBFC-ND-SI's capital adequacy to meet the 12% CRAR (or 15% if applicable) as per the phased timeline.
- Ensure your board has approved a policy for single/group exposure limits as per the norms.
- If you are an Asset Finance Company, document board approvals for any exposure exceeding standard limits by up to 5% of owned fund.
- Access the full compendium on RBI's website for detailed compliance reference.
Who it affects
Systemically Important Non-Deposit Taking NBFCs (NBFC-ND-SI), Asset Finance Companies (AFCs), NBFCs as specified in relevant paragraphs, excluding RNBCs, PDs, and government-owned companies (with roadmap requirement)
What is the minimum CRAR for NBFC-ND-SI as per this circular?
NBFC-ND-SI must maintain a minimum CRAR of 12% as on March 31, 2010, which will increase to 15% as on March 31, 2011.
Can Asset Finance Companies exceed single exposure limits?
Yes, AFCs can exceed single party and group exposure limits by up to an additional 5% of their owned fund in exceptional circumstances, with board approval.
What is the asset size threshold for being classified as NBFC-ND-SI?
An NBFC-ND with an asset size of Rs. 100 crore or more as per the last audited balance sheet is considered systemically important.