Master Direction for Non-Banking Financial Companies
The Reserve Bank of India (RBI) has issued Master Directions for Non-Banking Financial Companies (NBFCs) that are Non-Systemically Important Non-Deposit taking Companies.
The directions provide guidelines for NBFCs on various aspects, including:
- Registration and Licensing: NBFCs must obtain a Certificate of Registration (CoR) from the RBI to commence business.
- Capital Requirements: NBFCs must maintain a minimum net owned fund of ₹2 crore.
- Prudential Norms: NBFCs must comply with prudential norms, including asset classification, provisioning, and capital adequacy.
- Exposure Norms: NBFCs must adhere to exposure norms, including limits on investments and loans.
- Disclosure and Transparency: NBFCs must disclose certain information, including their financial position, to the public.
- Corporate Governance: NBFCs must have a board of directors and adhere to corporate governance norms.
- Supervision and Regulation: NBFCs are subject to supervision and regulation by the RBI.
The Master Directions are applicable to all NBFCs that are not systemically important and do not accept public deposits.
The RBI has updated these directions several times, with the latest update being on August 29, 2023.
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