What changed
RBI issued a master circular consolidating all existing instructions for NBFC-ND-SI issued up to June 30, 2013, into a single document. It reaffirms the asset size threshold of ₹100 crore for systemic importance, CRAR requirements (10% initially, then 12% as of March 31, 2010, and 15% as of March 31, 2011), and exposure norms. No new rules were introduced; this is a compilation for ease of reference.
What it means for you
Banks and NBFCs now have a single reference point for NBFC-ND-SI compliance, reducing the need to track multiple circulars. The consolidated instructions clarify that NBFC-ND-SI must maintain CRAR of at least 10% initially, then 12% as of March 31, 2010, and 15% as of March 31, 2011, and adhere to exposure limits. This helps lenders assess counterparty risk and regulatory compliance when dealing with NBFCs.
What you must do
- Review the consolidated compendium for NBFC-ND-SI instructions to ensure your bank's exposure policies align with current norms.
- Verify that any NBFC-ND-SI counterparty meets the minimum CRAR of 10% initially, then 12% as of March 31, 2010, and 15% as of March 31, 2011, as per the circular.
- Update internal risk assessment frameworks to reference this master circular for NBFC-ND-SI compliance checks.
- Ensure your bank's relationship with NBFC-ND-SI adheres to single/group exposure norms as outlined in the circular.
Who it affects
All Non-Banking Financial Companies (NBFCs), especially NBFC-ND-SI, Banks with exposure to NBFC-ND-SI, Risk and compliance teams at banks and NBFCs, Regulatory reporting departments
What is the asset size threshold for an NBFC to be classified as systemically important (NBFC-ND-SI)?
As per the circular, all NBFCs-ND with an asset size of ₹100 crore or more as per the last audited balance sheet are considered systemically important.
What is the minimum CRAR requirement for NBFC-ND-SI?
NBFC-ND-SI must maintain a minimum CRAR of 10% initially, which was changed to 12% as of March 31, 2010, and 15% as of March 31, 2011. For deposit-taking NBFCs (NBFCs-D), the applicable minimum CRAR is either 12% or 15% as specified.
Does this circular introduce new regulations?
No, this is a master circular that consolidates all existing instructions issued up to June 30, 2013, into one document for easy reference. No new rules are introduced.