RESERVE BANK OF INDIA (test)

DEPARTMENT OF REGULATION 

CENTRAL OFFICE, 2^ND FLOOR, MAIN OFFICE BUILDING

SHAHID BHAGAT SINGH MARG, FORT, MUMBAI – 400 001

RBI/DoR/2023-24/106

DoR.FIN.REC.No.45/03.10.119/2023-24                                         October 19, 2023                                                                             (Updated as on November 10, 2023)

Master Direction – Reserve Bank of India (Non-Banking Financial Company –

Scale Based Regulation) Directions, 2023

The Reserve Bank of India, having considered it necessary in the public interest, and being satisfied that, for the purpose of enabling the Reserve Bank to regulate the financial system to the advantage of the country and to prevent the affairs of any NonBanking Financial Company from being conducted in a manner detrimental to the interest of investors and depositors or in any manner prejudicial to the interest of such NBFCs, and in exercise of the powers conferred under sections 45JA, 45K, 45L and 45M of the Reserve Bank of India Act, 1934 (Act 2 of 1934) and section 3 read with section 31A and section 6 of the Factoring Regulation Act, 2011 (Act 12 of 2012), hereby issues to every NBFC, in supersession of the Non-Banking Financial Company–Non-Systemically Important Non-Deposit taking (Reserve Bank)

Directions, 2016 and Non-Banking Financial Company–Systemically Important NonDeposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016, Master Direction – Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023 (the Directions), hereinafter specified.

                                                                             (J P Sharma)

Chief General Manager

6. Net Owned Fund Requirement
   1. In exercise of the powers conferred under clause (b) of sub-section (1) of section 45IA of the RBI Act,1934 and all the powers enabling it in that behalf, the Reserve Bank, hereby specifies ₹10 crore as the Net Owned Fund (NOF) required for an NBFC-ICC, NBFC-MFI and NBFC-Factor to commence or carry on the business of non-banking financial institution. For NBFC-P2P, NBFC-AA, and NBFC not availing public funds and not having any customer interface, the NOF shall be ₹2 crore. For NBFC-IFC and IDF-

NBFC, the NOF shall be ₹300 crore.

1. 2. The following glide path is provided for the existing NBFCs, viz., NBFC-ICC, NBFC-MFI^[1] and NBFC-Factor to achieve the NOF of ₹10 crore:

1. 3. NBFCs failing to achieve the prescribed level within the stipulated period shall not be eligible to hold the Certificate of Registration (CoR) as NBFCs. 
   4. 1. Loans, advances and other credit facilities including bills purchased and discounted

   5. The provisioning requirement in respect of loans, advances and other credit facilities including bills purchased and discounted shall be as under:

      Loss Assets	The entire asset shall be written off. If the assets are permitted to remain in the books for any reason, 100% of the outstanding shall be provided for.
      Doubtful Assets	(a) 100% provision to the extent to which the advance is not covered by the realisable value of the security to which the NBFC has a valid recourse shall be made. The realisable value is to be estimated on a realistic basis;
      	(b) In addition to item (a) above, depending upon the period for which the asset has remained doubtful, provision to the extent of 20% to 50% of the secured portion (i.e. estimated realisable value of the outstanding) shall be made on the following basis:
      	Period for which the asset has been considered as doubtful	% of provision
      	Up to one year	20
      	One to three years	30
      	More than three years	50
      Sub-standard assets	A general provision of 10% of total outstanding shall be made.