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Home / Business / RBI tightens NBFC funding norms

RBI tightens NBFC funding norms

Investors in NBFCs from countries that do not comply with FATF regulations won't be allowed to hold a direct or indirect stake of more than 20% in shadow banks
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Our Special Correspondent   |   Mumbai   |   Published 16.02.21, 02:14 AM

The RBI has tightened the norms for investments from grey or blacklisted Financial Action Task Force (FATF) jurisdictions into non-banking finance companies (NBFCs) which could limit investments made by Mauritius-based entities in them.

In a notification on Friday, the central bank said investors in NBFCs from countries that do not comply with the FATF regulations should not be allowed to hold a direct or indirect stake of more than 20 per cent in the shadow banks. This limit takes into account potential voting power which arises from instruments convertible into equity.

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The FATF — an intra-governmental organisation headed by the Organisation for Economic Co-operation and Development — puts out black and grey lists of countries that are not fully co-operating on money laundering and the financing of terrorism. While the blacklist has two nations,  the grey list has 15 countries, including Mauritius.

Urban co-op banks

The RBI has constituted a panel to draw up a vision document to strengthen urban co-operative banks (UCBs) and explore the potential of consolidation in the sector. The committee will be headed by former RBI deputy governor N.S. Vishwanathan.



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