Master Class on NBFC - III An Insight into Prudential Norms скачать в хорошем качестве

Master Class on NBFC - III An Insight into Prudential Norms

Welcome to our Master Class: NBFCs- III: An Insight into Prudential Norms! 🛡️📈 The stability and resilience of the NBFC sector are built upon a foundation of robust financial health, governed by the Reserve Bank of India's (RBI) prudential norms. These are a set of regulatory guidelines designed to ensure that NBFCs operate in a safe and sound manner, mitigating risks and protecting the financial system. This session will provide you with a detailed understanding of the most critical prudential norms, including income recognition, asset classification, provisioning, and capital adequacy, with a special focus on the new Scale-Based Regulation (SBR) framework. Key Pillars of Prudential Norms Income Recognition: This norm dictates that an NBFC can only recognize income on a loan or investment if the account is a performing asset. For non-performing assets (NPAs), income recognition is based on actual receipt rather than accrual. Asset Classification: This is a key aspect of risk management. The RBI mandates that NBFCs classify their assets (primarily loans and advances) into specific categories based on the overdue period. Under the new SBR framework, all NBFCs are now required to adhere to the 90-day overdue norm for classifying an account as an NPA, a significant change for smaller NBFCs. Provisioning: Once an asset is classified as an NPA, the NBFC must make provisions for it in its financial statements. The provisioning amount varies based on the category of the NPA (Substandard, Doubtful, or Loss) and the length of time it has remained in that category. The stricter norms ensure that the financial statements accurately reflect the company's asset quality. Capital Adequacy: To absorb unexpected losses, NBFCs are required to maintain a minimum capital-to-risk-weighted assets ratio (CRAR). Under the SBR, this ratio is tiered. For instance, NBFCs in the Base Layer (BL) must maintain a CRAR of at least 15%, while those in the Upper Layer (UL) have additional requirements, including a Common Equity Tier 1 (CET1) ratio of at least 9%. This layered approach ensures that the most systemically important NBFCs are held to the highest standards. Concentration Norms: These norms limit an NBFC's exposure to a single borrower or a group of related borrowers to prevent over-concentration of risk. For NBFCs in the Middle Layer (ML), the credit exposure to a single borrower should not exceed 25% of Tier I capital, and for a group of borrowers, it should not exceed 40%. Navigating the New SBR Framework The Scale-Based Regulation (SBR) framework is a major shift in RBI's supervisory approach, categorizing NBFCs into four layers (Base, Middle, Upper, and Top) based on their size, activity, and systemic importance. The prudential norms are applied in a progressive manner, with stricter regulations for higher layers. Don't miss this crucial master class to navigate the complexities of RBI's prudential norms and ensure your NBFC is financially resilient and fully compliant. 👍 If you found this video helpful, please give it a thumbs up and subscribe to our channel for more insights into corporate law, governance, and compliance. 🔔 Click the bell icon to get notified of our latest uploads! Connect with us for more insights and updates: LinkedIn:   / mnmlegal   Facebook:   / mnmlegals   Instagram:   / mehtaandmehta   #NBFC #PrudentialNorms #RBI #SBR #NPA #CRAR #FinancialCompliance #CorporateGovernance #Masterclass #Webinar #MehtaAndMehta