NBFC CRAR Hiked to 15% for Deposit-Taking Firms by March 2012

RBI/2010-11/408 DNBS.PD/CC.No.211 /03.02.002/2010-11 February 17, 2011 All deposit taking NBFCs Dear Sir, All Deposit Taking NBFCs - CRAR Fifteen percent w.e.f March 31, 2012 In terms of paragraph 16 of Non Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007, every deposit taking NBFC shall maintain a minimum capital ratio consisting of Tier I and Tier II capital, which shall not be less than 12% of its aggregate risk weighted assets on balance sheet and of risk adjusted value of off-balance sheet items.  However, in terms of paragraph 16 of Non Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007, dated February 22, 2007, every systemically important non-deposit taking NBFC(NBFC-ND-SI) has to maintain a minimum capital ratio consisting of Tier I and Tier II capital, which shall not be less than 15% of its aggregate risk weighted assets on balance sheet and of risk adjusted value of off-balance sheet items by March 31, 2011. 2.  It has been decided to align the minimum capital ratio of all deposit taking as well as systemically important non-deposit taking NBFCs to 15%.  Accordingly, all deposit taking NBFCs shall maintain a minimum capital ratio consisting of Tier I and Tier II capital, which shall not be less than 15% of its aggregate risk weighted assets on balance sheet and risk adjusted value of off-balance sheet items w.e.f. March 31, 2012.  Accompanying notification No. DNBS.224/CGM (US) - 2011 dated February 17, 2011 is enclosed for compliance. Yours Sincerely, (Uma Subramaniam) Chief General Manager-in-Charge Encl: as above RESERVE BANK OF INDIA DEPARTMENT OF NON-BANKING SUPERVISION CENTRAL OFFICE CENTRE I, WORLD TRADE CENTRE, CUFFE PARADE, COLABA, MUMBAI 400 005. Notification No. DNBS.224 / CGM(US)-2011 dated  February 17, 2011 The Reserve Bank of India, having considered it necessary in public interest and being satisfied that, for the purpose of enabling the Bank to regulate the credit system to the advantage of the country, it is necessary to amend the Non-Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007, contained in Notification No.DNBS. 192/DG(VL)-2007 dated February 22, 2007 , in exercise of the powers conferred by section 45JA of the Reserve Bank of India Act, 1934 (2 of 1934) and of all the powers enabling it in this behalf, hereby directs that the said Directions shall be amended with immediate effect as follows, namely - Amendment of paragraph 16 - In sub-paragraph (1) of paragraph 16, the following sentence shall be inserted at the end of the sub-paragraph – “[Such ratio shall not be less than fifteen percent by March 31, 2012.]” (Uma Subramaniam) Chief General Manager-in-Charge

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2010-11/408 · issued 17 Feb 2011. The plain-English explanation above is BankPulse’s own independent summary.

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Topics: Deposits / Interest Rates

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