Read this week in our update, provisioning for standard assets by NBFC-UL specified by RBI. RBI initiated the process of reviewing the existing Payments Infrastructure Development Fund.
1. RBI provides for provisioning for Standard assets by NBFC-UL
The Reserve Bank of India (RBI) has notified non-banking financial companies- upper layer (NBFC-UL) that they shall maintain provisions in respect of ‘standard’ assets at the following rates for the funded amount outstanding:
| Category of Assets | Rate of Provision |
| Individual housing loans and loans to small and micro enterprises (SMEs) | 0.25% |
| Housing loans extended at teaser rates | 2.00 %, which shall decrease to 0.40% after 1 year from the date on which the rates are reset at higher rates (if the accounts remain ‘standard’) |
| Advances to commercial real estate – residential housing (CRE – RH) Sector | 0.75% |
| Advances to commercial real estate (CRE) sector (other than CRE-RH) | 1% |
| Restructured advances | As stipulated in the applicable prudential norms for restructuring of advances |
| All other loans and advances not included above, including loans to medium enterprises | 0.40% |
Further, the following definitions/clarifications are made:
- The definition of the terms micro enterprises, small enterprises, and medium enterprises (MSMEs) shall be as per the circular dated July 2, 2020 on ‘Credit Flow to Micro, Small and Medium Enterprises Sector’.
- Commercial Real Estate (CRE) shall consist of loans to builders/ developers/ others for creation/acquisition of commercial real estate.
- Commercial Real Estate – Residential Housing (CRE–RH) is a sub-category of CRE that consist of loans to builders/ developers for residential housing projects (except for captive consumption).
- Housing loans with teaser rates are those with comparatively lower interest rates for the first few years, after which the interest rates are reset at higher rates.
- Current credit exposure is defined as the sum of all derivative contracts’ gross positive mark-to-market values with regard to a single counterparty, adjusted for any negative marked-to-market values with the same counterparty.
These guidelines shall come into effect from October 1, 2022.[1]
2 . RBI cancels Certificate of Registration of 3 NBFCs
RBI has cancelled the Certificate of Registration (CoR) issued to Malik Motor Finance Limited, a non-banking finance company (NBFC).
Further, RBI has the CoR issued to the following housing finance companies: [2]
| Sl. No. | Name of the Company | CoR Issued on | Cancellation Order Date |
| 1. | North East Region Housing Finance Company Limited | October 13, 2009 | May 27, 2022 |
| 2. | Aryarth Housing Finance Limited | July 31, 2017 | May 30, 2022 |
Henceforth, the NBFCs shall not transact the business of a non-banking financial institution.
3. Two non-banking financial companies surrender their Certificate of Registration to RBI
RBI has accepted the surrender of CoR of the following 2 non-banking financial companies (NBFCs):
| Sl. No. | Name of the Company | CoR Issued on | Cancellation Order Date |
| 1. | Empower India Capital Investments Private Limited | September 09, 2008 | May 13, 2022 |
| 2. | Mangalmayee Garments Private Limited (Presently known as Abhijeet Ferrotech Limited) | December 23, 2000 | May 30, 2022 |
Hence, these companies shall not transact the business of a non-banking financial institution.[3]
4. RBI discontinues return under FEMA
RBI has discontinued the return “Details of guarantee availed and invoked from non-resident entities” under Foreign Exchange Management Act, 1999 effectively from the quarter ending June 2022.[4]
5. RBI reviews Payments Infrastructure Development Fund
RBI has initiated the process of reviewing and amending the existing Payments Infrastructure Development Fund (PIDF) scheme to speed up and expand the implementation of payment acceptance infrastructure in the targeted regions. Further, RBI has provided statistics on number of payment acceptance devices deployed under the PIDF Scheme. [5]
[1] RBI/2022-23/61DOR.STR.REC.40/21.04.048/2022-23, Reserve Bank of India, June 06, 2022
[2] Press Release: 2022-2023/344, Reserve Bank of India, June 09, 2022
[3] Press Release: 2022-2023/343, Reserve Bank of India, June 09, 2022
[4] RBI/2022-23/69A.P. (DIR Series) Circular No. 05, Reserve Bank of India, June 09, 2022
[5] Press Release: 2022-2023/345, Reserve Bank of India, June 09, 2022
