RBI fine-tunes capital norms for non-bank firms


Mumbai: The Reserve Financial institution of India (RBI) has fine-tuned the capital norms for NBFCs, permitting revaluation of reserves from property to be counted as tier-1 capital as a substitute of tier-2. It additionally permitted calculation of earnings topic to deductions of dividend primarily based on previous years.

“Revaluation reserves arising out of change within the carrying quantity of an NBFC’s property consequent upon its revaluation in accordance with the relevant accounting requirements might, on the discretion of the NBFC, be reckoned as CET1 capital at a reduction of 55%, as a substitute of as Tier 2 capital underneath extant rules,” the RBI stated in a press release. These modifications might be topic to assembly sure situations that embrace guidelines equivalent to that the property is held for personal use, that the non-bank lender is ready to promote the property readily at its personal will, and that the revaluation reserves are disclosed individually within the monetary statements.

The regulator additionally launched prudential tips on publicity norms aimed toward addressing credit score danger focus in prime tier NBFCs.

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