RBI revised norms for Upper Layer NBFCs, setting an asset size of Rs 1 lakh crore. It allowed government-owned NBFCs in this layer without mandatory listing and increased the large exposure limit for Infrastructure Finance Companies to 45%.
New Criteria for Upper Layer NBFCs
The Reserve Bank of India has issued revised norms for classifying NBFCs in the Upper Layer category and for the inclusion of government-owned NBFCs in the category. According to the revised criteria, the Upper Layer NBFCs will be categorised on the basis of an asset size of Rs 1,00,000 crore and above as per the latest audited balance sheet for the financial year.
The Upper Layer will have those NBFCs that are specifically identified by the central bank as warranting enhanced regulatory requirements based on the revised criteria of Rs 1,00,000 crore asset threshold. The asset criteria for categorising NBFCs will be reviewed every three years, the RBI said.
Rules for Government-owned and Listed NBFCs
The RBI, in its amendments to the earlier norms, also allowed eligible government-owned NBFCs to be a part of the Upper Layer in accordance with the regulator's ownership-neutral approach. However, these government-owned NBFCs that are categorised as Upper Layer will not have to list on the stock exchanges.
NBFCs that are categorised in the Upper Category have to list on the exchanges within three years of them being recognised as NBFC-UL.
Lending Norms Eased for Infrastructure Finance
In another major move, the RBI eased the norms for lending by the NBFC-IFCs placed in the Upper Layer category. The RBI has increased the large exposure limit for IFCs in Upper Layer to 45 per cent of their eligible capital base from the earlier limit of 35 per cent.
The easing of norms for Infrastructure Finance Companies in the Upper Category will allow a group of connected borrowers to avail larger funding and will ensure that infrastructure projects don't remain stuck. The RBI said that the relaxation in norms has been done considering the financing needs of the infrastructure sector and to avoid any adverse impact on infrastructure projects.
NBFCs placed in the Upper Layer category are systemically important entities due to their size and need more regulatory oversight to avoid any shock to the financial system. (ANI)
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