MUMBAI: Reserve Bank of India issued new norms for provisioning for standard assets by NBFCs, after analyzing the increasing role played by these entities in the financial system.
Previous year RBI also came up with the framework for the scale-based regulations for Non-Banking financial companies.
RBI issued the framework that the new framework consists of four layers based on different activities, size of the organizations, and also the perceived risk.
The central bank also specified the rates of the provision made for outstanding loans, those were extended by NBFC upper layer.
When it comes to loans the small and micro-enterprise (SMEs) the provision has specified 0.25 percent. And for the housing loans, it has been specified as 2.5 percent After a year of increasing the rates, these rates will later decrease to 0.75 percent.
In the case of commercial real estate, the rate will be 1 percent. For CRE – the RH rates mentioned are 0.75 percent.
The RBI also fixed the rate for medium-sized enterprises, which is 0.4 percent.
It is mentioned that the upper layer will consist of the top 10 NBFCs, according to the size of their assets and irrespective of any other factor.
The below-mentioned layers are the 4 layers as per the scale-based regulation for NBFs:
1- Base layer
2- Middle layer
3- Upper layer
4- Top layer