The Reserve Bank of India (RBI) announced a scale-based regulation of non-banking finance companies on October 22, 2021.RBI’s regulation also comprises of a ceiling on IPO funding per borrower and changes in minimum net owned fund, capital requirements and classification of non-performing assets.
RBI caps NBFC IPO Funding
Under the new framework, RBI has kept a ceiling of Rs. 1 crore per borrower to finance subscription of an Initial Public Offering (IPO).Overall guidelines will be effective from October 1, 2022, while the instructions related to the ceiling on IPO funding will come into effect from April 1, 2022.
Under the new framework, regulatory structure of non-banking financial companies (NBFCs) will comprise of four layers based on the size, activity, and perceived riskiness namely top layer, upper layer, middle layer, and base layer.
