RBI aligns exposure, disclosure norms for NBFCs with banks

RBI has laid down a set of rules for non-bank financiers on large exposures, lending to directors and sought additional disclosures in their notes to accounts. These guidelines are meant to further harmonize regulations between banks and non-banks.

In October last year, RBI had announced scale-based regulations for non-banking financial companies (NBFCs), with effect from October this year. The regulatory structure for NBFCs will be divided into four layers based on their size, activity, and perceived riskiness. The lowest layer is base layer, followed by middle, upper and top layers.

RBI said that aggregate exposure of an upper layer NBFC to any entity must not be higher than 20% of its capital base, although the board can approve an additional 5% to take it to 25%. However, for infrastructure finance companies, the aggregate limit will be 30% to a single entity. To a group of connected entities, aggregate exposure will be limited to 25% of the capital base (unless on account of an infra loan) for all upper layer NBFCs apart from infrastructure finance companies where it will be 35%.