What changed
Previously, deposit-taking NBFCs needed a minimum CRAR of 12%, while systemically important non-deposit-taking NBFCs (NBFC-ND-SI) had a 15% target by March 31, 2011. RBI has now mandated that all deposit-taking NBFCs must also achieve a 15% CRAR by March 31, 2012, harmonizing the requirement across both categories.
What it means for you
Deposit-taking NBFCs must bolster their capital buffers to 15% of risk-weighted assets, a 3 percentage point increase from the earlier 12% floor. This strengthens their resilience against asset quality shocks but may pressure profitability or growth if capital is scarce. Lenders should review capital adequacy plans and explore Tier I or Tier II instruments to meet the deadline.
What you must do
- Assess current CRAR and calculate the capital shortfall to reach 15% by March 31, 2012.
- Plan capital infusion through equity, reserves, or eligible Tier II debt instruments.
- Monitor risk-weighted asset growth to ensure the ratio stays above the new minimum.
- Update internal prudential norms and reporting systems to reflect the revised CRAR requirement.
Who it affects
All deposit-taking NBFCs, Systemically important non-deposit-taking NBFCs (already at 15%), RBI's Department of Non-Banking Supervision
What is the new CRAR requirement for deposit-taking NBFCs?
It is raised from 12% to 15% of aggregate risk-weighted assets (on-balance sheet) and risk-adjusted value of off-balance sheet items, effective March 31, 2012.
Does this apply to all NBFCs?
No, it applies to all deposit-taking NBFCs. Systemically important non-deposit-taking NBFCs already had a 15% requirement by March 31, 2011.
What happens if an NBFC fails to meet the 15% CRAR by the deadline?
The circular does not specify penalties, but non-compliance with prudential norms may invite supervisory action, including restrictions on deposit acceptance or growth.