RBI on Monday said that public deposits accepting HFC can renew deposits after 12 months or more but not later than sixty months. It has allowed existing deposits with maturities above sixty months shall be repaid as per their existing repayment profile.
Separately, RBI has directed non-bank finance companies to put in place a mechanism to provide nomination facility for depositors irrespective of customers demanding the service.
RBI also said that NBFC can repay tiny deposits – not exceeding Rs 10,000- before expiry of three months in case the depositor demands it. In case of critical illness, the entire principal sum of deposit may be prematurely paid to individual depositors, on request, before the expiry of three months from the date of acceptance of such deposits, without interest.
The RBI’s latest Trend and Progress Report shows that as of March 2023 there are 97 HFC and 9480 NBFC as on September 2023. Of this, deposits taking HFC are 15 and NBFCs are 26.
RBI said the deposit taking HFC should also have an investment grade rating and if the rating falls below investments grade, HFC are barred from renewing existing deposits or accepting new deposits. The RBI has also placed a ceiling on the quantum of public deposits to 1.5 times of net owned funds. This is lowered from 3 times earlier. RBI has directed those HFCs that have raised deposits above the ceiling of 1.5% not to accept any fresh deposits until they conform to the revised norms. The existing excess deposits will be allowed to run off till maturity, the RBI said.
The RBI said that the risk weightage on exposures – fund based and non-fund based – to commercial real estate residential buildings that are not classified as standard assets shall be 100%. The risk weightage for standard assets for similar exposure will be 75%.
The RBI has also said that deposit taking HFCs should fix board-approved internal limits for investments in unquoted shares of another company which is not a subsidiary company or a company in the same group of the HFC. Such board-approved internal limits shall form part of overall limits and sub-limits for exposure to the capital market for deposit taking HFCs.
Non-deposit taking HFCs with asset size of Rs 1,000 crore and above (as per audited balance sheet of immediately preceding financial year) are permitted to participate in the interest rate futures market subject to rupee interest rate derivative guidelines.