RBI said NBFCs should not give loans of 5 crore or more to their chairman, MD or their relatives and directors. Apart from this, approval will only be given for any builder project when all necessary approvals have been received from the government.
The Reserve Bank of India (RBI) has tightened the rules for non-banking financial services companies (NBFCs). RBI has requested NBFC to provide loans for the real estate sector only after getting all the approvals related to the project. It was said by RBI that NBFCs will also need to get approval before loan approval in some cases.
It has been said by RBI that NBFCs should not issue loans of Rs 5 crore or more to their chairman, MD or their relatives and directors. Apart from this, if the director of NBFC is a partner in a company, the rigor will also apply to him. All amended rules will be effective from October 1, 2022.
In the changes made, it was said that if the loan will be given by NBFC to its senior staff, the board should be informed first. Loan approval for any builder project will not be available until the project has obtained all necessary approvals. Small NBFCs will be required to obtain a board-approved policy for director loans.
Basic level NBFCs do not take deposits and have assets of less than Rs 1,000 crore. On the other hand, mid-tier non-bank financial companies also do not accept deposits, but their asset size is Rs 1,000 crore or more. At the same time, high-end NBFCs are those that have been identified by the Reserve Bank to increase regulatory requirements.
(Agency contributions)
