The Reserve Bank of India (RBI) has formed a working group to examine issues pertaining to the regulation of non-banking financial companies (NBFCs). The group will be headed by former Reserve Bank deputy governor Usha Thorat.
“In view of the economic role and heterogeneity of the sector and the recent international experience, a need was felt to reflect on the broad principles that underpin the regulatory architecture for NBFCs,” RBI said in a release.
The group would deal with emerging issues concerning the definition and classification of NBFCs, regulatory gaps and arbitrage, maintaining governance standards and appropriate approach to NBFC supervision, the release said.
“The scope of examination will, however, be within the current legislative framework,” it added.
The central bank has been emphasising on tighter regulations and monitoring of NBFCs. Last month, RBI raised the minimum capital adequacy ratio of deposit-taking NBFCs to 15 per cent, to align it with the systemically important non-deposit taking NBFCs.
Similarly, late last year, RBI introduced a new regulatory framework for NBFCs which were ‘core investment companies’, primarily focusing on investments in group companies.
