RBI Fixes Out Rule For NBFCs To Pay Their Dividends
- ByStartupStory | June 25, 2021
The Reserve Bank of India, said on Thursday a non-bank financier must report a net NPA ratio of less than 6% in each of the last three years, including as at the close of the financial year for which dividend is proposed. ,RBI fixes rules and certain other conditions for NBFC, non-banking financial companies, so that they pay dividends to shareholders from the financial year ending March 31, 2022. The regulation further states that the conditions are only for different categories of NBFC, which will have to meet minimum capital adequacy ratios, net non-performing asset (NPA) ratios, and a few other criteria to be able to declare dividend to shareholders. The RBI said a non-bank financier must report a net NPA ratio of less than 6% in each of the last three years, including as at the close of the financial year for which dividend is proposed.
The Reserve Bank of India therefore tightens rules for major non-bank lenders to prevent a collapse in one of them from affecting the financial system. The regulator proposed to classify the non-banking financial companies into four categories, depending on their systemic importance and potential risk to the stability of the financial system.While RBI has sought to increase scrutiny of shadow banks, it has also assured them that the proposed changes will continue to allow those engaged in niche sectors and markets to have flexibility in business operations. The liquidity crisis that arose squeezed funding to non-banks and has engulfed several other lenders since then. All NBFCs with assets of up to ₹1,000 crore will fall under the NBFC-Base Layer category. They comprise more than 9,200 of India’s 9,425 non-deposit taking lenders and consist of non-systemically important NBFCs, peer-to-peer lending platforms, account aggregators and non-operating financial holding companies.
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