Homefinance News

RBI issues provisioning norms for upper-layer NBFCs

RBI issues provisioning norms for upper-layer NBFCs

RBI issues provisioning norms for upper-layer NBFCs
Profile image

By CNBC-TV18 Jun 6, 2022 8:49 PM IST (Published)

For individual housing loans and loans to small and micro enterprises (SMEs), upper-layer NBFCs have to provide a 0.25 percent provision for the funded amount outstanding. 'The top ten eligible NBFCs in terms of their asset size shall always reside in the upper layer,' RBI had said.

The Reserve Bank of India (RBI) on June 6 said it has issued standard assets provisioning guidelines for upper-layer non-banking finance companies (NBFCs), which will be effective from October 1, 2022.

Recommended Articles

View All

For individual housing loans and loans to small and micro enterprises (SMEs), upper layer NBFCs will have to provide a 0.25 percent provision for the funded amount outstanding.


Coming to housing loans extended at teaser rates, it will be 2 percent of their outstanding exposure, which will decrease to 0.40 percent after one year from the date on which the rates are reset at higher rates, if the accounts remain standard.

Further, for advances to the residential housing sector, upper layer NBFCs will have to provide 0.75 percent of their outstanding exposure. For advances to the commercial real estate sector, it will be 1 percent of their outstanding exposure.

Also, for all other loans and advances not included in the above categories, including loans to medium enterprises, upper layer NBFCs will have to provide 0.40 percent of their outstanding exposure.

Earlier, the central bank said, "The upper layer shall comprise of those NBFCs which are specifically identified by the Reserve Bank as warranting enhanced regulatory requirement based on a set of parameters and scoring methodology. The top ten eligible NBFCs in terms of their asset size shall always reside in the upper layer, irrespective of any other factor."

On the large exposure framework with the upper layer, the regulator said these prudential guidelines are aimed at addressing credit risk concentration in NBFCs and are set out to identify large exposures, refine the criteria for grouping of connected counterparties and put in place reporting norms for large exposures.

Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!

Most Read

Market Movers

View All
Top GainersTop Losers
CurrencyCommodities
CompanyPriceChng%Chng