Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 – Amendment in paragraphs 1 and 2


DATED 2-12-2011

In exercise of the powers conferred by Sections 45JA of the Reserve Bank of India Act, 1934 and of all the powers enabling it in this behalf, and in partial modification of Notification No. DNBS. 193 dated DG (VL)-2007 dated February 22, 2007, the Reserve Bank hereby notifies as follows, namely-

1. Amendment of paragraph 1

i.  In sub paragraph (3) clause (vii) may be inserted to read as follows:

‘The provisions of paragraph 18 of these Directions shall not apply to an NBFC-MFI as defined in the Non-Banking Financial Company- Micro Finance Institutions (Reserve Bank)Directions 2011’.

‘The provisions of paragraphs 8 and 9 will not be applicable to an NBFC-MFI w.e.f April 01, 2012.

2 Amendment of paragraph 2

(1) In sub-paragraph (1), after clause (viii), the following clause (viii a) shall be inserted’.

An NBFC-MFI means a non-deposit taking NBFC (other than a company licensed under Section 25 of the Indian Companies Act, 1956) that fulfils the following conditions:

 i.   Minimum Net Owned Funds of Rs. 5 crore. (For NBFC-MFIs registered in the North Eastern Region of the country, the minimum NOF requirement shall stand at Rs. 2 crore).

ii.  Not less than 85% of its net assets are in the nature of “qualifying assets.”

For the purpose of ii. above,

“Net assets” are defined as total assets other than cash and bank balances and money market instruments.

“Qualifying asset” shall mean a loan which satisfies the following criteria:-

i. loan disbursed by an NBFC-MFI to a borrower with a rural household annual income not exceeding Rs. 60,000 or urban and semi-urban household income not exceeding Rs. 1,20,000;

ii.  loan amount does not exceed Rs. 35,000 in the first cycle and Rs. 50,000 in subsequent cycles;

iii.  total indebtedness of the borrower does not exceed Rs. 50,000;

iv.  tenure of the loan not to be less than 24 months for loan amount in excess of Rs. 15,000 with prepayment without penalty;

v.   loan to be extended without collateral;

vi.  aggregate amount of loans, given for income generation, is not less than 75 per cent of the total loans given by the MFIs;

vii.  loan is repayable on weekly, fortnightly or monthly instalments at the choice of the borrower

(2) In para 15, after the last sentence the following sentence shall be added:

“For an NBFC-MFI, such Certificate will also indicate that the company fulfils all conditions stipulated to be classified as an NBFC-MFI in the notification DNBS.PD.No.234/CGM(US)-2011 dated December 02, 2011″.

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