Master Circular on Bank Finance to Non-Banking Financial Companies (NBFCs)
This circular outlines the guidelines for bank finance to NBFCs, including those registered and not registered with the RBI.
Eligible NBFCs: Banks can provide finance to NBFCs registered with the RBI, as well as those not requiring registration.
Ineligible Activities: Bank credit is not permitted for certain activities, including:
• Leased and sub-leased assets
• Bridge loans/interim finance
• Advances against collateral security of shares to NBFCs
• Guarantees for placement of funds with NBFCs
Prudential Ceilings: Banks are subject to prudential ceilings for their exposure to NBFCs.
Investment Restrictions: Banks are restricted from making investments in securities/instruments issued by NBFCs.
Factoring Companies: Banks can provide finance to factoring companies.
This circular consolidates previous guidelines and provides a comprehensive framework for bank finance to NBFCs.
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Download: Master Circular – Bank Finance to Non-Banking Financial Companies (NBFCs)