RBI issue notification for deposit norms for NBFCs

The Reserve Bank of India (RBI) issued a notification to the Non-banking finance companies (NBFCs) having net-owned funds (NOF) less than Rs. 200 lakh to freeze their deposits at current levels

Further in a notification RBI has also asked the asset finance companies (AFCs), having a minimum investment grade credit rating and CRAR (capital-to-risk assets ratio) of 12 per cent, to bring down public deposits to a level i.e. 1.5 times their NOF. RBI has told NBFCs to bring their public deposits to a level equal to their NOF by March 31, 2009.

As per notification companies which have become eligible to accept public deposits up to a certain level and have not accepted deposits up to that limit have been permitted to accept public deposit up to the revised ceiling. NBFCs who have reached NOF level of Rs 200 lakh have to get a certificate issued from statutory auditor on NOF.

RBI stated that these measures are being taken with an aim to strengthen the financials of all deposit taking NBFCs. The notification stated the main objective is to make sure that they raise the NOF to a minimum Rs 200 lakh“in a gradual, non-disruptive and non-discriminatory manner.” RBI further stated that the NBFCs which have not been able to achieve the prescribed ceiling within the set time can approach it for appropriate action on a case-by-case basis.