**Summary:**
This notification, RBI/2015-16/363 DNBR.PD.CC.No.077/03.10.001/2015-16, issued by the Reserve Bank of India (RBI) on April 7, 2016, addresses the applicability of concentration of credit/investment norms for Systemically Important Non-Deposit Accepting or Holding Non-Banking Financial Companies (NBFC-NDSI).
The notification amends the Systemically Important Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015. Specifically, it exempts NBFC-NDSIs that do not access public funds in India, either directly or indirectly, and do not issue guarantees, from the concentration of credit/investment norms.
This decision was made after a review and is formalized through Notification No. DNBR.040/CGM(CDS)-2016, also dated April 7, 2016, which amends the original Directions. The amendment substitutes the second proviso to sub-paragraph 1 of paragraph 24 of the Directions.
The notification is issued under the powers conferred by section 45JA of the Reserve Bank of India Act, 1934.
For further information, contact C.D. Srinivasan, Chief General Manager, Department of Non-Banking Regulation, Reserve Bank of India, Central Office, Centre I, World Trade Centre, Cuffe Parade, Colaba, Mumbai – 400 005.
Key Entities Referenced
Systemically Important Non-Deposit accepting or Holding Non-Banking Financial Companies (NBFC-ND-SI): A category of Non-Banking Financial Companies (NBFCs) that are considered to have a significant impact on the financial system due to their size and interconnectedness.
Reserve Bank Directions, 2015: Refers to the Systemically Important Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015, which contains regulatory guidelines for NBFC-ND-SIs.
Concentration of Credit Investment Norms: Regulations that limit the amount of credit or investment exposure that a financial institution can have to a single entity or group of related entities.
Reserve Bank of India (RBI): The central bank of India, responsible for regulating the Indian banking and financial system.
C.D. Srinivasan: Chief General Manager at the Reserve Bank of India, signatory of the notification.
Reserve Bank of India Act, 1934: The legislation that established the Reserve Bank of India and provides the legal framework for its operations.
Mumbai, Maharashtra: Location of the Reserve Bank of India's Central Office.
Notification No. DNBR. 009 CGMCDS 2015 dated March 27, 2015: Previous notification being amended by this current notification.
RBI/2015-16/363
DNBR (PD) CC.No.077/03.10.001/2015-16 April 7, 2016
All Systemically Important Non- Deposit accepting or Holding
Non-Banking Financial Companies (NBFC-NDSI)
Madam/ Sir,
Applicability of Concentration of Credit/ Investment Norms
In terms of second proviso to sub para (1) of para 24 of the Systemically Important
Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential
Norms (Reserve Bank) Directions, 2015, any non-banking financial company not
accessing public funds, either directly or indirectly, or not issuing guarantees may
make an application to the Bank for an appropriate dispensation from the
concentration of credit/ investment norms.
2. On a review, it has been decided that concentration of credit/ investment
norms shall not apply to a systemically important non-banking financial company not
accessing public funds in India, either directly or indirectly, and not issuing
guarantees.
3. Notification No. DNBR.040/CGM(CDS)-2016 dated April 7, 2016 amending
the Systemically Important Non-Banking Financial (Non-Deposit Accepting or
Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015 is enclosed.
Yours faithfully
(C.D. Srinivasan)
Chief General ManagerRESERVE BANK OF INDIA
DEPARTMENT OF NON-BANKING REGULATION
CENTRAL OFFICE, CENTRE I, WORLD TRADE CENTRE
CUFFE PARADE, COLABA, MUMBAI 400 005
Notification No. DNBR 040/ CGM (CDS) -2016 dated April 07, 2016
The Reserve Bank of India (the Bank), having considered it necessary in public
interest and being satisfied that, for the purpose of enabling the Bank to regulate the
credit system to the advantage of the country, it is necessary to amend the
Systemically Important Non-Banking Financial (Non-Deposit Accepting or Holding)
Companies Prudential Norms (Reserve Bank) Directions, 2015 (Notification No.
DNBR. 009 CGM(CDS) – 2015 dated March 27, 2015) (hereinafter referred to as the
Directions) as amended upto March 10, 2016, in exercise of the powers conferred by
section 45JA of the Reserve Bank of India Act, 1934 (2 of 1934) and of all the
powers enabling it in this behalf, hereby directs that the Directions shall be amended
with immediate effect as follows –
1. Second proviso to sub paragraph (1) of paragraph 24 of the Directions shall
be substituted by
Provided further that the concentration of credit/ investment norms shall not apply
to a systemically important non-banking financial company not accessing public
funds in India, either directly or indirectly and not issuing guarantees.
(C.D.Srinivasan)
Chief General Manager