Mumbai: The Reserve Bank of India (RBI) on Friday announced a revised regulatory framework for non-banking financing companies (NBFC), which tightened the norms on capital and recognition of poor loans.
Under the revised framework, there will be more NBFC categories according to their activities with increasingly stringent rules on a scale.
The rule also closes the NBFC loan for IPO financing at Rs 1 Crore per borrower.
Under the new norm, the RBI will climb the requirements of clean-owned funds for all NBFC to Rs 10 Crore.
They also have to recognize loans late for more than 90 days as non-performing assets (NPA) in March 2026 and more than 150 days in 2024.
Earlier that day, Deputy Governor of RBI M Rajeshwar Rao said that the failure of a large NBFC or housing finance company (HFC) can be translated into a risk for lenders with the potential to create transmission.
Also, large NBFC failure and very intercourse can interfere with small and medium-sized NBFC operations through domino effects by limiting their ability to raise funds.
Speaking at the CII event, Rao said that liquidity pressure in the sector triggered by the failure of the Investment Core Company (IL & FS) broke the myth that NBFCs did not pose a systemic risk of the financial system.
Rao said that the NBFC would be categorized into three categories – a basic layer, the top layer and middle layer.
In the event of a new framework, the base layer will include NBFC non-deposit with assets under RS 1,000 Crore.
This can include peer peer loan platforms, account aggregators, non-operative financial companies and other financing companies that do not use public funds and have no customer interface.
The middle layer will include the NBFC taking deposits with assets of more than RS 1,000 Crore and will include the main dealer, infrastructure debt fund, core investment company, HFC and infrastructure financing companies.
The upper layer will be identified specifically by the RBI as guaranteed that regulatory requirements are increased and will include the top 10 NBFC in this country.
Rao also warned on digital lender malpractices.
“While the benefits obtained from digital financial services are not the point of debate, business behavior problems and governance standards adopted by the digital lenders have shaken trusted trust in financial digital facilities in India.
We and flooded with complaints of hard recovery practices, violations Data privacy, increasing fraudulent transactions, cybercrime, excessive interest rates and harassment, “Rao said.
NBFCS faces more stringent norms about capital, loans & bad loans
