The Reserve Bank of India (RBI) on Tuesday announced a slew of rules for non-banking finance companies (NBFCs) relating to their large exposures, lending to directors and loans to the real estate sector apart from disclosures in their financial statements.

The rules are part of the scale based regulation (SBR) which was announced in October, 2021. They will be applicable from October 1, 2022.

The banking regulator had segregated the NBFCs into four layers in October 2021 — base, middle, upper and the top layers.

In a notification issued on Tuesday, the RBI said the exposure of NBFCs who come in the upper layer to any entity must not exceed 20 per cent of its capital base at all times. However, the board can allow an additional exposure of five per cent, up to 25 per cent.

In case of infrastructure finance companies, the exposure can stretch up to 30 per cent of their capital base.

The ceiling for upper layer NBFCs will be 25 per cent for loans to a group of connected parties or firms and 35 per cent in infrastructure finance .

In another notification applicable to middle layer and upper layer NBFCs, the RBI said an approval from the board of directors or committee of directors is mandatory for NBFCs granting loans and advances aggregating Rs 5 crore and above to directors — including the chairman or managing director — or relatives of directors.

Loans to senior officers of the NBFC will have to be reported to the board.

In base layer NBFCs — non-deposit taking below the asset size of Rs 1,000 crore and others — the RBI said that they should have a board approved policy on grant of loans to directors, senior officers and relatives of directors and to entities where directors or their relatives have major shareholding.

The board approved policy should include a threshold beyond which loans to these persons will be reported to the board.

In real estate, the RBI said that NBFCs will have to ensure that the borrowers have obtained prior permission from government or local government or other statutory authorities for the project.

The central bank also set the disclosure requirements for the non-bank lenders. For those in the base layer, middle layer and upper layer they will have to disclose exposure to real estate and capital market. They will also have to disclose sectoral exposure such as agriculture, industry and services.