Regulating Non-Banking

Background The activities of non-banking financial companies (NBFCs) were being regulated by the provisions of Chapter IIIB of the Reserve Bank of India Act, 1934 (the RBI Act) for over three decades. The emphasis of these regulations was, however, on the acceptance of deposit by NBFCs mainly as an adjunct to monetary and credit policy. Over the years, these companies have become an important segment in the financial system of the country. Besides, there has been inte

The Reserve Bank of India today announced with immediate effect certain refinements in the percentage of liquid assets to be maintained by non-banking financial companies. Quantum In terms of the provisions of Section 45IB of the Reserve Bank of India Act, 1934, the NBFCs are required to maintain liquid assets equivalent to 10 per cent of their deposit liabilities in the specified approved securities, viz., government securities and government guaranteed bonds. The lo

The expert group for designing a supervisory framework for Non-Banking Financial Companies (NBFCs) (Khanna Committee) has recommended introduction of a supervisory rating system for the registered NBFCs. The Group has also recommended that such a rating system should be designed on the basis of different levels of regulatory/supervisory compliance, capital adequacy and ratings assigned by the credit rating agencies. The Group has recommended that the rating process mi