RBI relaxes bank lending norms for well-rated NBFCs

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RBIIn a bid to maintain risk weights on bank lending, the Reserve Bank of India (RBI) has eased norms for Non-Banking Financial Companies (NBFCs).

This move will help stronger NBFCs in lending more.

The Central Bank has announced the harmonisation of different categories of NBFCs for helping them with better flexibility in their operations.

Post the announcement, shares of several NBFCs surged. NBFCs in India are facing hardships owing to the default by IL&FS and some of its arms.

“Under extant guidelines on Basel III capital regulations, exposures/claims of banks on rated as well as unrated non-deposit taking systemically important non-banking financial companies…have to be uniformly risk-weighted at 100 percent. With a view to facilitating flow of credit to well-rated NBFCs, it has now been decided that rated exposures of banks to all NBFCs, excluding core investment companies (CICs), would be risk-weighted as per the ratings assigned by the accredited rating agencies, in a manner similar to that for corporates,” the RBI said in a statement.

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