The Hindu Business Line : Capital adequacy norms for NBFCs hiked to 12%

Mumbai, Aug 1 In order to tighten the regulation of systemically important non-deposit taking non banking financial companies with asset size of Rs 100 crore and above, the Reserve Bank of India, today, said such NBFCs will have to maintain higher capital to risk weighted to assets ratio (CRAR) of 12 per cent against the current 10 per cent.

The CRAR will be increased to 15 per cent from April 1, 2010, the RBI said.

In the draft guidelines released in June 2008, the RBI had set a deadline of 2009 for increasing the CRAR to 15 per cent.

“Non-deposit taking NBFCs (NBFCs-ND) were subject to minimal regulation. In the light of the evolution and integration of the financial sector, it was felt that all systemically relevant entities offering financial services ought to be brought under a suitable regulatory framework to contain systemic risk,” the RBI said.

Systemically important ND-NBFCs (NBFCs-ND-SI) will also have to make additional disclosures in their balance sheets from the year ending March 31, 2009.

These disclosures relate to CRAR, exposure to real sector, both direct and indirect and maturity pattern of assets and liabilities, the RBI said.

In view of the possibilities of leveraged investments, and asset liability mismatches resulting from use of short term sources to fund NBFC activities, it has now been decided to introduce a system of reporting for NBFCs-ND-SI, the RBI said.

More Stories on : NBFCs

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Rupee gains 20 paise

Capital adequacy norms for NBFCs hiked to 12%

Tata Capital to enter home loans business

Oriental Bank insurance venture

Interest subsidy on export credit to go

Ministry seeks revival of RBI’s special liquidity window for oil cos

Union Bank may hike lending rate by 50 bps

ING Vysya hikes PLR by 50 bps

Bonds gain in volatile trade

‘Banks to see moderate credit growth’

Call rates end higher

‘Rising credit card defaults worrisome’

NRE deposit rates reduced

Banks asked to tap more low-cost funds