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Informist, Tuesday, Mar. 10, 2026

 

MUMBAI – In a boost to non-banking financial companies and asset reconstruction companies, the Reserve Bank of India Tuesday published amended directions on the computation of capital for these firms, allowing the inclusion of quarterly profits, subject to conditions. The central bank issued amended norms on clarifications for non-banks, housing finance companies, core investment companies, mortgage guarantee companies, asset reconstruction companies and standalone primary dealerships. All seven amended directions take effect immediately, the central bank said.

 

The central bank revised the definition of "owned fund" in relevant master directions to include quarterly profits, subject to conditions such as review of financial statements on a quarterly basis by statutory auditors. For shadow banks' concentration risk management, mortgage guarantee companies and standalone primary dealers, the central bank also revised the definition and applicability of tier 1 capital, linking it to the latest available financial statements.

 

"The proposed Draft Directions only specify certain enabling conditions under which quarterly profits can be taken to capital if the NBFCs so require/ desire for the purpose of computing credit/ investment concentration limits," the central bank said of the amendments to non-banking financial companies' prudential norms on capital adequacy, in an annexure. 

 

On Jan. 13, the central bank had invited public comments on the draft amendment directions, which proposed clarifications on the computation of owned funds and tier 1 capital of these companies. The draft directions were introduced after requests from shadow lenders to provide clarity on the treatment of owned funds and tier 1 capital, particularly for the compliance with credit and investment concentration limits. Prior to the release of the amended directions, NBFCs--other than those in the upper layer--and asset reconstruction companies calculated tier 1 capital as of Mar. 31 of the previous financial year for meeting concentration norms.  End

 

Reported by Cassandra Carvalho

Edited by Deepshikha Bhardwaj

 

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