𝗧𝗵𝗲 𝗥𝗲𝘀𝗲𝗿𝘃𝗲 𝗕𝗮𝗻𝗸 𝗼𝗳 𝗜𝗻𝗱𝗶𝗮 (𝗥𝗕𝗜) recently announced new rules for Non-Banking Financial Companies (𝗡𝗕𝗙𝗖𝘀) 𝗼𝗻 𝗢𝗰𝘁𝗼𝗯𝗲𝗿 𝟭𝟵, 𝟮𝟬𝟮𝟯. The RBI has been actively regulating the NBFC sector, adapting to its changes.
Before, NBFCs were divided into two types: important for the system and not important. However, in October 2022, the RBI changed this to a four-layer system: base, middle, upper, and top. This brought some positive changes, but it also led to confusion about which rules apply to which NBFCs.
Previously, smaller NBFCs were considered non-important, while larger ones were. Now, with the new rules, 𝙉𝘽𝙁𝘾𝙨 𝙬𝙞𝙩𝙝 𝙖𝙨𝙨𝙚𝙩𝙨 𝙪𝙣𝙙𝙚𝙧 𝙍𝙨. 1000 𝙘𝙧𝙤𝙧𝙚𝙨 𝙖𝙧𝙚 𝙞𝙣 𝙩𝙝𝙚 𝘽𝙖𝙨𝙚 𝙇𝙖𝙮𝙚𝙧, 𝙖𝙣𝙙 𝙩𝙝𝙤𝙨𝙚 𝙬𝙞𝙩𝙝 𝙢𝙤𝙧𝙚 𝙖𝙧𝙚 𝙞𝙣 𝙩𝙝𝙚 𝙈𝙞𝙙𝙙𝙡𝙚 𝙇𝙖𝙮𝙚𝙧. 𝙏𝙝𝙞𝙨 𝙘𝙧𝙚𝙖𝙩𝙚𝙨 𝙪𝙣𝙘𝙚𝙧𝙩𝙖𝙞𝙣𝙩𝙮 𝙛𝙤𝙧 𝙉𝘽𝙁𝘾𝙨 𝙬𝙞𝙩𝙝 𝙖𝙨𝙨𝙚𝙩𝙨 𝙗𝙚𝙩𝙬𝙚𝙚𝙣 𝙍𝙨. 500 𝙘𝙧𝙤𝙧𝙚𝙨 𝙖𝙣𝙙 𝙍𝙨. 1000 𝙘𝙧𝙤𝙧𝙚𝙨.
The SBR Master Direction, now in effect, aims to bring together the diverse regulations that apply to NBFCs of various sizes and functions into a single framework. This consolidation simplifies the regulations outlined in the SBR Framework that oversee different layers of NBFCs. The goal is to provide clear compliance guidelines and ensure that all NBFCs adhere to a consistent and transparent framework.