RBI seeks public feedback on NBFC, ARC capital rule tweaks

The Reserve Bank of India on Tuesday, January 13, invited public comments on draft amendment directions proposing clarifications on the computation of Owned Fund and Tier 1 Capital for non-banking financial companies (NBFCs) and asset reconstruction companies (ARCs), and their applicability to credit and investment concentration norms.

According to the RBI, the proposed draft amendments seek to modify several existing master directions, including those relating to capital adequacy, concentration risk

management, and prudential norms applicable to NBFCs, housing finance companies, core investment companies, mortgage guarantee companies, ARCs, and standalone primary dealers.

The draft amendments would update the Reserve Bank of India (Non-Banking Financial Companies – Prudential Norms on Capital Adequacy) Directions, 2025, as well as the NBFC Concentration Risk Management Directions, 2025, through second amendment directions issued in 2026. Similar amendments have been proposed to the RBI’s directions governing housing finance companies, core investment companies, mortgage guarantee companies, ARCs, and standalone primary dealers.

The central bank has invited feedback from stakeholders on the proposed changes until January 28, 2026. Comments can be submitted through the ‘Connect 2 Regulate’ section on the RBI’s website or sent directly to the Department of Regulation at the RBI’s Central Office in Mumbai, including via email, the RBI said.

The RBI said that currently, NBFCs, excluding those in the upper layer, and asset reconstruction companies compute Tier 1 Capital as on March 31 of the previous financial year for the purpose of complying with credit and investment concentration norms. The central bank noted that it has received several representations from NBFCs seeking a review of these provisions, along with clarifications on certain aspects of Owned Fund and Tier 1 Capital computation. After reviewing the relevant guidelines and directions, the RBI has proposed the draft clarifications and revisions and has now placed them in the public domain for stakeholder feedback.

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