RBI proposes to tighten provisioning norms NBFCs just as with banks
As per latest draft guidelines proposed by the RBI, Non-banking financial companies (NBFC) would need its approval before making changes in their ownership control.
As per the proposed guidelines which are based on the Usha Thorat Committee report:
- The draft guidelines seek to make it mandatory for all deposit-taking NBFCs to obtain credit rating.
- Appointment of CEOs of NBFCs with asset size of Rs.1,000 crore and above would require the RBI approval.
- NBFCs, whether listed or not, will need to comply with Clause 49 of SEBI’s listing agreement on corporate governance including induction of independent directors.
- Existing unrated NBFCs-D will be given one year to get rated.
- All registered NBFCs should get clearance from the RBI in case of change in control and increase of shareholding to the extent of 25% by individuals or groups, directly or indirectly.
- Regarding non-performing assets (NPAs), it has been proposed that asset classification and provisioning norms should be made similar to that of banks for all registered NBFCs irrespective of the size.
- Currently, the period for classifying loans into NPAs in case of NBFCs is higher at 180/360 days compared to 90 days for banks.