The Reserve Bank of India vide its notification dated 22nd January 2021 has issued a discussion paper on a scale-based regulation of non-banking finance companies (NBFCs), inviting comments from companies, market participants and other stakeholders within one month.
The proposed regulatory changes broadly pertain to capital, concentration norms and governance/ disclosure norms.
For NBFCs in the base layer, regulations do not change significantly, but for the change in NPA classification to 90 days from 180 days currently. The asset size threshold has been raised to Rs 1,000 crore from Rs 500 crore, bringing more NBFCs under the base layer (9,209 from 9,133 earlier) and the entry norms have been tightened, raising the minimum net owned funds criteria to Rs 20 crore from Rs 2 crore earlier.
