Credit Concentration Norms for NBFC

In terms of sec­tion 45IA(7)(I) of the Reserve Bank of India Act, 1934, for cal­cu­la­tion of Net Owned Fund (NOF), the loans giv­en to/ invest­ments made in com­pa­nies in the same group/ sub­sidiaries by NBFCs, inter alia, shall be reduced to the extent such amount exceeds 10 per cent of the Owned Funds. At the same time, such expo­sures are sub­ject to the Con­cen­tra­tion of Credit/ Invest­ment norms as per the Sys­tem­i­cal­ly Impor­tant Non-Bank­ing Finan­cial (Non-Deposit Accept­ing or Hold­ing) Com­pa­nies Pru­den­tial Norms (Reserve Bank) Direc­tions, 2015 dat­ed March 27, 2015 and Non-Bank­ing Finan­cial (Deposit Accept­ing or Hold­ing) Com­pa­nies Pru­den­tial Norms (Reserve Bank) Direc­tions, 2007 dat­ed Feb­ru­ary 22, 2007.

2. On a review it has been decid­ed that in deter­min­ing Con­cen­tra­tion of Credit/ Invest­ment, the fol­low­ing shall be excluded:

(A) invest­ments of NBFC in shares of

(i) its subsidiaries;

(ii) com­pa­nies in the same group,

to the extent they have been reduced from Owned Funds for the cal­cu­la­tion of NOF and

(B) the book val­ue of deben­tures, bonds, out­stand­ing loans and advances (includ­ing hire-pur­chase and lease finance) made to, and deposits with, -

(i) sub­sidiaries of the NBFC; and

(ii) com­pa­nies in the same group,

to the extent they have been reduced from Owned Funds for the cal­cu­la­tion of NOF.

3. Noti­fi­ca­tion No. DNBR. 027/CGM (CDS) ‑2016 dat­ed July 02, 2015 amend­ing the Sys­tem­i­cal­ly Impor­tant Non-Bank­ing Finan­cial (Non-Deposit Accept­ing or Hold­ing) Com­pa­nies Pru­den­tial Norms (Reserve Bank) Direc­tions, 2015 and Noti­fi­ca­tion No. DNBR. 028/CGM(CDS)-2016 dat­ed July 02, 2015 amend­ing the Non-Bank­ing Finan­cial (Deposit Accept­ing or Hold­ing) Com­pa­nies Pru­den­tial Norms (Reserve Bank) Direc­tions, 2007 are enclosed.

RBI/2015–16/114 DNBR (PD) CC.No. 064/03.10.001/2015–16

July 02, 2015