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

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