Norms for NBFCs modified

Mumbai: The Reserve Bank of India (RBI) has modified the prudential norms applicable to non-banking finance companies (NBFCs) in relation to their exposure to this sector. The norms prescribed for NBFCs are now in alignment with the norms prescribed for banks and financial institutions.

For the purpose of encouraging NBFCs to grant infrastructure loans, the RBI has specified that, now, when infrastructure loans granted by NBFCs are restructured or renegotiated or rescheduled before the assets have been classified as sub-standard, they can continue to be classified as standard assets, subject to certain conditions.

Further, NBFCs are now allowed to exceed the exposure norms by 5 per cent for single party and 10 per cent for single group of parties if the additional exposure is on account of infrastructure-related loans and investments. Further, all investments by NBFCs in AAA-rated securitised paper pertaining to the infrastructure facility will attract risk weight of 50 per cent instead of 100 per cent.

With regards to classification of non-performing assets (NPAs), the RBI has said an NPA will be classified in a substandard category for a period of only 18 months as against the present norm of 24 months from the date it is recognised as NPA.