In its final guidelines for non-banking finance companies (NBFCs) that would be released soon, RBI is likely to retain its stand on the asset-classification criteria and capital adequacy requirement for NBFCs, according to sources.
The draft guidelines for NBFCs that were released on January had proposed that loans must be classified as non-performing assets when a principal or interest installment is overdue for 90 days. Currently, NBFCs classify loans as NPAs only when repayment is overdue for 180 days.
Sources said RBI has given adequate time to meet the norms and, therefore, NBFCs must not be worried. NBFCs have been told to meet a 120-day asset-classification norm by April 2014 and the 90-day norm by 2015.
Several NBFCs had requested RBI to keep the asset-classification norm at the current 180 days as the change could push up their provisioning and erode profits. ?When is the loan an NPA? Only when it is overdue for 90 days. But the NBFC can set the due date. We have only told to set the date as per the cash flow,? the source said.
?We have also said one time change of schedule of repayment will not amount to restructurin,? the source added.
The draft norms have also proposed an increase in Tier-I capital of deposit-taking and systemically important non-deposit taking NBFCs.
Captive NBFCs must have a minimum Tier-I capital of 12%, higher than the 7.5% currently and other NBFCs must have a Tier-I ratio of at least 10%. NBFCs will be given a period of three years to achieve this ratio.
Given the heterogeneity of the NBFC sector, the RBI is willing to give dispensation to certain types of NBFCs, the source said. ?But the underlying rule is that to the extent possible we want to keep everybody on the same platform,? the source said.
Finance minister P Chidambaram is said to have agreed to most of the RBI?s proposals on the NBFC guidelines. In August 2011, a committee under former deputy governor Usha Thorat had submitted a report on the need for regulating the NBFC sector due to its growing importance and connection with the banking industry. The draft guidelines accepted most of the recommendations of the Thorat committee.