Bom HC: LARR Authority Can Examine Limitation Issues in Land Acquisition References under 2013 Act  ||  MP HC: Long-Serving Employees Cannot Be Denied Regularisation by Retrospective Statutory Amendments  ||  J&K&L HC: Routine Challenges to Lok Adalat Awards Defeat Their Purpose of Quick Dispute Resolution  ||  Bombay HC: Restricting Compensation For Wild Animal Damage to Select Species Violates Article 14  ||  Supreme Court: Corporate Guarantee Constitutes as Financial Debt under the IBC  ||  Supreme Court: No Right to Full Tenure Exists When Appointment is Made ‘Until Further Orders’  ||  SC Mandates Trial Courts Seek Reports on Mitigating and Aggravating Factors Before Death Sentencing  ||  Supreme Court: Schools Cannot Delay Admission of State-Allotted Student over an Eligibility Dispute  ||  J&K&L HC: Delay in Executing Preventive Detention on Unsubstantiated Medical Ground Makes it Invalid  ||  Delhi HC Allows AITA Results For Interim Management and Directs Fresh Elections Under New Sports Law    

RBI issues draft circular on Liquidity Risk Management Framework for Non-Banking Financial Companies - (24 May 2019)

Banking

Reserve Bank has issued a draft circular on the “Liquidity Risk Management Framework for Non-Banking Financial Companies (NBFCs) and Core Investment Companies (CICs). It is proposed to 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. In order to fulfil the need for a stronger Asset Liability Management (ALM) framework in the NBFCs, RBI has proposed set of guidelines to be followed.

Certain new features have been added to ALM framework. 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. In order to ensure a smooth transition to the LCR regime, the proposal is to implement it in a calibrated manner through a glide path over a period of four years commencing from April 2020 and going upto April 2024. An NBFC shall maintain an adequate level of unencumbered High Quality Liquid Assets (HQLA) that can be converted into cash to meet its liquidity needs for a 30 calendar-day time horizon under a significantly severe liquidity stress scenario. Further, NBFCs are required to disclose information on their LCR in their annual financial statements under Notes to Accounts.

The Non-Banking Financial Companies (NBFCs) plays a significant role in the financial system of the country. NBFCs’ ability to perform their role effectively and efficiently requires them to be financially resilient, well-regulated and properly governed so that they retain the confidence of all their stakeholders including their lenders and borrowers. Effective liquidity risk management would help ensure an NBFC’s ability to meet its obligations as and when they fall due and reduce the probability of an adverse situation. There will be Asset-Liability Management Committee (ALCO) consisting of the NBFC’s top management to ensure adherence to the risk tolerance/limits set by the Board as well as implement the liquidity risk management strategy of the NBFC.

Tags : NBFCS   CIRCULAR   GUIDELINES  

Share :        

Disclaimer | Copyright 2026 - All Rights Reserved