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

Treatment of Right-of-Use (ROU) Asset under Master Direction - Reserve Bank of India (Non-Banking Financial Company - Scale Based Regulation) Directions, 2023

21-Mar-2025 | RBI/2024-25/128 DOR.CAP.REC.No.68/21.01.002/2024-25

RBI has issued a notification regarding the Treatment of Right-of-Use (ROU) Asset for Regulatory Capital Purposes, effective from 21st March 2025. By virtue of this notification, amendment is made to Para 5.1.25 of the Master Direction - Reserve Bank of India (Non-Banking Financial Company - Scale Based Regulation) Directions, 2023 regarding the Owned Fund, after sub-clause (viii) a clarification is inserted, which specifies that NBFCs are not required to deduct a Right-of-Use (ROU) asset (created in terms of Ind AS 116-Leases) from Owned Fund, provided the underlying asset being taken on lease is a tangible asset. Further, an amendment is made in Para 107.2(ix) regarding the regulatory adjustments/deductions in the calculation of CET 1 capital, a clarification is inserted which specifies that NBFCs are not required to deduct an ROU asset (created in terms of Ind AS 116- Leases) from CET 1 capital, provided the underlying asset being taken on lease is a tangible asset.

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