| NBFCs registered prior to April, 1999 to raise their Net Owned Funds NOF to Rs.2 crore by March, 2017 |
Brings in parity for NBFCs formed prior to and after April, 1999
Ensures only serious and competitive players with minimum NOF remain in the market |
| Limit on deposit acceptance reduced to 1.5 times of Owned Funds from 4 times of Owned Funds for Deposit taking AFCs and mandatory investment grade credit rating for accepting public deposits |
Mandatory investment grade credit rating helps to safeguard depositors
Limit on deposits improves safety for public depositors
However, majority of deposit taking NBFCs are already compliant
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| Revision in threshold for defining systemically important NBFC to asset size of Rs.500 crore from Rs.100 crore |
Larger NBFCs subjected to more stringent norms
However, regulatory compliance requirement reduced for NBFCs having assets size between 100 crore to 500 crore
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| Multiple NBFC that are part of a corporate group or floated by common set of promoters will not be viewed on standalone basis |
To help regulate groups having multiple small NBFCs and bring them under more regulatory supervision
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| Introduction of leverage ratio (total outside liabilities / owned funds) of 7 for NBFC-ND having assets less than Rs.500 crore |
Restricts leverage of non systemically important NBFCs
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| Increase in Tier I CAR (core CAR) to 10% from current 7.5% for NBFC-D and NBFC-ND-SI
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In line with RBI’s move to improve loss absorbing capacity of systemically important financial institutions
Will increase capital requirement in the long run.
However, currently most of the large NBFCs have Tier I CAR of more than 10%, so there would be no immediate impact
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| Change in NPA recognition to 90 days overdue from 180 days overdue for loans and 360 days for hire purchase assets |
Removes regulatory arbitrage for NBFCsvis-à-vis banks
Will lead to jump in NPAs for the NBFCs over the short term
Will impact the profitability due to higher provisioning requirement with increase in NPAs and interest reversals
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| Provision on standard assets increased from 0.25% to 0.40% |
Strengthen the balance sheet of NBFCs by increasing the loss absorption capacity of NBFCs in long run
Will have higher impact on profitability in short run
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| Credit concentration norms for AFCs to be in line with other NBFCs |
Unlikely to have much impact as AFCs typically have retail loans
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| Corporate governance and disclosure norms |
Will improve corporate governance and accountability of systemically important NBFCs and improve transparency
Ensures availability of important information to investors
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