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Corporate Laws Central Ministry of Finance Reserve Bank of India Act, 1934

Credit/Investment Concentration Norms - Credit Risk Transfer

15-Jan-2024 | RBI/2023-2024/112 DOR.CRE.REC.70/21.01.003/2023-24

RBI has issued Credit/Investment Concentration Norms - Credit Risk Transfer for all the Non-Banking Financial Companies including Housing Finance Companies.

By virtue of this circular in order to ensure uniformity and consistency in computation of concentration norms among NBFCs, a review of the extant concentration norms has been carried out and it has been decided as under:

A. Regulations for NBFC-ML

1. The exposures of NBFC-ML shall also be offset with credit risk transfer instruments listed below:-

a. Cash margin/caution money/security deposit held as collateral on behalf of the borrower against the advances for which right to set off is available.
b. Central Government guaranteed claims which attract 0 per cent risk weight for capital computation.
c. State Government guaranteed claims which attract 20 per cent risk weight for capital computation etc.

B. Regulations for NBFC-BL

NBFC-BL shall put in place an internal Board approved policy for credit/investment concentration limits for both single borrower/party and single group of borrowers/parties.

C. Regulations for NBFC-UL

A reference is drawn to paragraph 110.4.2 of MD on NBFC which lists out the credit risk transfer instruments. It is clarified that to be eligible as a credit risk transfer instrument, guarantees shall be direct, explicit, irrevocable and unconditional.

All other terms and conditions for LEF and credit/investment concentration norms shall continue as per the extant instructions.

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