A Revised Regulatory Framework for NBFCs
Scale Based Regulation (SBR): A Revised Regulatory Framework for NBFCs
The contribution of NBFCs towards supporting real economic activity and their role as a supplemental channel of credit intermediation alongside banks is well recognised. Over the years, the sector has undergone considerable evolution in terms of size, complexity, and interconnectedness within the financial sector. Many entities have grown and become
systemically significant and hence there is a need to align the regulatory framework for NBFCs keeping in view their changing risk profile.
- Pursuant to the announcement made in the Statement on Developmental and Regulatory Policies dated December 04, 2020, a discussion paper titled ‘Revised Regulatory Framework for NBFCs – A Scale-based Approach’ was issued for public comments on January 22, 2021. Based on the inputs received, it has now been decided to put in place a revised regulatory framework for NBFCs (Annex).
- As the SBR framework encompasses different facets of regulation of NBFCs covering capital requirements, governance standards, prudential regulation, etc., it has been decided to first issue an integrated regulatory framework for NBFCs under SBR providing a holistic view of the SBR structure, set of fresh regulations being introduced and respective timelines. Detailed guidelines as delineated in the Annex, will be issued subsequently.
- These guidelines shall be effective from October 01, 2022. The instructions relating to ceiling on IPO funding given vide para 3.1(d) of the Annex shall come into effect from April 01, 2022.
Read More on RBI
