RBI amends prudential norms for non-deposit accepting systematically important NBFCs

RBI has, vide Notification No. DNBS(PD).214/ CGM(US)-2010 dated July 09, 2010, amended the Non-Banking Financial (Non- Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 (“Prudential Norms”). Third proviso to para 18 of the Prudential Norms has been amended as follows:

“Provided further that any systemically important non-deposit taking non-banking financial company not accessing public funds, either directly or indirectly, or not issuing guarantees may make an application to the Bank for an appropriate dispensation consistent with the spirit of the exposure limits”.

Prior to the amendment, the third proviso of para 18 read as follows:

“Provided further that any systemically important non-deposit taking non-banking financial company not accessing public funds, either directly or indirectly, may make an application to the Bank for an appropriate dispensation consistent with the spirit of the exposure limits.”

It may be noted that para 18 of the Prudential Norms prescribes certain ceilings on concentration of credit and investment. The pre-amendment third proviso to para 18 allowed NBFCs not accessing public funds to make an application for seeking dispensation from the application of the ceilings. RBI has noted that non-deposit taking systematically important NBFCs may be issuing guarantees, devolvement of which may require access to public funds. Therefore, third proviso has been amended to stipulate that only such NBFCs which do not access the public funds or issue guarantees may make an application for seeking dispensation from the applicability credit/ investment concentration norms.