“The guidelines on NBFCs focus on systemic risks — the treatment on capital market exposures are the steepest, with risk weightage of 150 per cent. This is warranted considering the volatility in the stock markets. We should appreciate that the RBI has left the business model intact, and has just tightened the norms. Even the risk weightage for real estate exposure has gone up to 125 per cent, which is expected and warranted,” said Mr V. Vaidyanathan, Future Capital Holdings.

However, a few are concerned about the capital adequacy ratio for Tier-I being raised to 12 per cent from 7.5 per cent, while banks still enjoy 4.5 per cent.

Major issue

“If arbitrage between banks and non-banks is an issue, then why should the banks have an advantage on this? This change can impact the growth of the NBFCs and since the NBFCs largely cater to the rural disenfranchised, this may also have an impact on Financial Inclusion.,” said Mr Sanjay Chamria, Vice-Chairman and Managing Director, Magma Fincorp Ltd.

Another matter of concern are the provisioning norms equating banks to NBFCs, which experts feel is unfair as NBFCs are mainly into retail lending and banks mostly into wholesale.

“Also the fact is that in the NBFCs, the customer equity is about 30 per cent. Hence, the committee should have considered this fact before prescribing the provisioning norms,” added Mr Chamria.

Others said asset classification and provisioning norms for NBFCs being on par with that for banks was a good move.

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