RBI permits middle and base layer NBFCs to use credit risk mitigation tools

RBI has allowed NBFCs classified as middle and base layer entities, to utilise credit risk mitigation tools to offset their exposure with eligible credit risk transfer instruments.

The step has been taken to harmonise norms across NBFCs; currently, upper layer NBFCS under the Large Exposures Framework, are permitted to use Credit Risk Mitigation (CRM) instruments to reduce their exposure to a counterparty.

“With a view to harmonising credit concentration norms among NBFCs, it has been decided to permit NBFCs in the middle and base layers also to use CRM instruments to reduce their counterparty exposure under the credit concentration norms,” said Governor Shaktikanta Das in his statement.