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The Reserve Bank of India's (RBI) proposed stricter norms for non-banking financial companies (NBFC) support strong balance sheets but do not address the issues of funding and liquidity, the key credit weaknesses of the sector, said a report by ...
Finance > Banks & institutions > Companies (banking) > RBI 25 January 2021 Reserve Bank of India (RBI) has proposed to introduce a scale-based regulatory framework, anchored on proportionality, for non-banking financial companies (NBFCs). RBI said the proposed regulatory and supervisory framework of NBFCs shall be based on a four-layered structure – Base Layer, Middle Layer, Upper Layer and a possible Top Layer. If the framework is visualised as a pyramid, the bottom of the pyramid, where least regulatory intervention is warranted, can consist of NBFCs, currently classified as non-syste...
RBI proposes multilayer system and stricter norms for NBFCs 23 Jan 2021 A securityman stands guard in front of the Reserve Bank of India building in New Delhi. File/ Reuters The Reserve Bank of India (RBI) proposed a four-layered structure for non-banking finance companies (NBFCs) and new norms to strengthen their governance and operations. The RBI, in a discussion paper, proposed to differentiate between NBFCs depending upon the layer they belong to, such as base and middle. “To sum up, regulatory and supervisory framework of NBFCs shall be based on a four-layer...
In view of the recent stress in the Non-Banking Financial Compnies (NBFC) sector, it has become imperative to reexamine the suitability of regulatory approach, especially when failure of an extremely large NBFC can precipitate systemic risks, the RBI said today. The central bank has proposed a multiple layer structure to categorise NBFCs depending on their size and interconnectedness with the system. RBI stated that regulatory framework of NBFCs shall be based on a four-layered structure- Base Layer (NBFC-BL), Middle Layer (NBFC-ML), Upper Layer (NBFC-UL) and Top Layer. Proposed regulatory fr...
Read more about RBI paper proposes new regulatory framework for NBFCs, 4-tier structure on Business Standard. The paper proposed a structure to categorise NBFCs, or shadow banks, depending on their size and interconnectedness with the system