RBIs strict rules for the Non-Banking Finance Companies

Reserve Bank of India (RBI) has tightened the rules for the Non-Banking Finance Companies (NBFC) on the systematic working between them and the banks. “For NBFCs with large asset sizes, and for all deposit accepting NBFCs, regulations have been harmonised across NBFCs, and to some extent, with banks. The intent is to create a level playing field that does not unduly favour or disfavor any institution,” RBI said
Big companies with asset size of Rs 500 crore or more and NBFCs taking deposits will face tight provisions and will have to raise minimum tier one Capital to 8.5 per cent by end of March 2016 and 10 per cent by end of March 2017. This strict classification of assets for NBFCs has been done to bring them at the banks level.

In the revised regulations temporary suspension of licenses has been revoked by RBI for the sector which was in force since April 1, 2014.

Considering the overall growth of the NBFCs with assets over Rs 100 crore which were considered significant has been increased to Rs 500 crore. For obtaining the license new companies will have to pay Rs 2 crore. NBFCs accepting funds from public will have to get themselves rated by March 31, 2016. The companies that do not get themselves rated will not be allowed to accept or renew deposits.

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