NBFCs' will find their insurance foray tough according to new RBI guidelines
Mumbai: If the draft guidelines issued by the Reserve Bank of India (RBI) is anything
to go by, non-banking finance companies (NBFCs) are virtually out of the race to promote
insurance companies. RBI has prescribed eligibility criteria for NBFCs to enter the
insurance business and this disqualifies almost all companies, unless they can spring
major surprises if their balance sheet as of March 2000 is any indicator. According to the draft guidelines, an NBFC should have a net worth
of over Rs 500 crore and a capital adequacy of 15 per cent if it is in the loan and
investment business and raises public deposits and 12 per cent to enter insurance
business. Further, it has also declared that NBFCs proposing to set insurance companies
should have net non-performing assets (NPAs) of less than five per cent and a three-year
continuous profitability track record.
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