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Reserve Bank comes out with Provisioning norms for large NBFCs

Published on June 07, 2022
Current Context: Reserve Bank of India came out with a set of norms for provisioning standard assets by large Non-Banking Financial Companies because of the increasing role played by such entities in the financial system.
Reserve Bank comes out with Provisioning norms for large NBFCs
  • Based on their size, activity, and perceived riskiness a framework for scale-based regulation for NBFCs has been designed.
  • While considering scale-based regulation for NBFCs, the four layers are Base Layer, Middle Layer, Upper Layer, and Top Layer.
  • The upper layer comprises those NBFCs which are specifically identified by RBI as warranting enhanced regulatory requirements based on a set of parameters and scoring methodology.
  • Besides it also consists of the top ten eligible NBFCs in terms of their asset size.
  • In the case of individual housing loans and loans to Small and Micro Enterprises (SMEs), the rate of provision has been specified at 0.25% and for housing loans, it has been fixed at 2%.
  • Apart from that, the rate of provision for medium enterprises has been fixed at 0.4% and restructuring loans will be as per the stipulation in the applicable prudential norms.


Q.1 As per the recent norms for NBFCs, scale-based regulation has been divided into how many types?
a. 4
b. 3
c. 2
d. 1
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