De-registration of small NBFCs will hurt financial inclusion: Finmin
The proposed RBI norms say that while deposit-taking NBFCs will continue to be registered and regulated irrespective of their size, non-deposit taking NBFCs with less than R25 crore-asset size need not be registered or regulated as they do not pose any systemic risk. It also would not prevent small innovative start-up companies from entering into financial activities, the RBI said.
The RBI has also said that NBFCs will not be allowed to take deposits unless they have a mandatory credit rating, adding that those unrated deposit-taking NBFCs, which are currently unrated, will get a year’s time to obtain a rating or else will not be permitted to take fresh deposits or renew the deposits they already have.
Industry experts point out that it is not possible for NBFCs lesser than R25 crore-asset size to get investment rating and, therefore, the proposed RBI guidelines indirectly impact both deposit- and non-deposit taking NBFCs. The RBI cited lack of resources to regulate so many small NBFCs, which the ministry has recognised as a challenge.
The new draft norms of RBI say that existing non-deposit taking NBFCs with asset size below R25 crore, but which intend to continue to be registered, are required to notify the central bank within three months of the new directions a road map on how they are going to increase their asset size to
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