RBI releases draft circular on Liquidity Risk Management Framework for Non-Banking Financial Companies and Core Investment Companies for public comments

May 27, 2019 | by Avantis RegTech Legal Research Team


The Reserve Bank of India (RBI) on May 24, 2019, has issued draft circular on “Liquidity Risk Management Framework for Non-Banking Financial Companies (NBFCs) and Core Investment Companies (CICs)” for public comments.

NBFCs play an important role in the financial system of the country, particularly in delivering credit to the last mile, including the retail as well as MSME sectors. Therefore, RBI has issued a draft circular so that it can be adopted by all deposit taking NBFCs; non-deposit taking NBFCs with an asset size of 100 crore and above; and all CICs registered with the Reserve Bank.

While some of the current regulatory prescriptions applicable to NBFCs on Asset Liability Management (ALM) framework have been updated / recast, certain new features have been added. Among others, the draft guidelines cover application of generic ALM principles, granular maturity buckets in the liquidity statements and tolerance limits, liquidity risk monitoring tool and adoption of the “stock” approach to liquidity. In addition, the draft proposes to introduce Liquidity Coverage Ratio (LCR) for all deposit taking NBFCs; and non-deposit taking NBFCs with an asset size of 5000 crore and above.

RBI seeks public comments from NBFCs, market participants and other stakeholders on the draft framework for consideration before issuing the final guidelines by June 14, 2019.

[Press Release: 2018-2019/2767]

Click here to download the Press Release.


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