June 6, 2023

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RBI: RBI fine-tunes capital norms for non-bank companies

Mumbai: The Reserve Lender of India (RBI) has good-tuned the funds norms for NBFCs, making it possible for revaluation of reserves from property to be counted as tier-1 funds as a substitute of tier-2. It also permitted calculation of earnings subject matter to deductions of dividend based on past years.

“Revaluation reserves arising out of modify in the carrying quantity of an NBFC’s house consequent on its revaluation in accordance with the applicable accounting criteria may well, at the discretion of the NBFC, be reckoned as CET1 money at a lower price of 55%, rather of as Tier 2 capital beneath extant polices,” the RBI claimed in a statement. These variations will be subject to assembly selected disorders that incorporate procedures these as that the house is held for possess use, that the non-financial institution lender is ready to promote the assets readily at its personal will, and that the revaluation reserves are disclosed individually in the monetary statements.

The regulator also launched prudential rules on publicity norms aimed at addressing credit history threat focus in prime tier NBFCs.