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RBI/2006-07/130
DNBS.(PD).CC. No.78 /03.05.002/2006-07
September 20, 2006
To All Non-Banking Financial Companies
including Residuary Non-Banking Companies
Dear Sirs,
Amendments to Non-Banking Financial
Companies Prudential Norms (Reserve Bank) Directions, 1998 - Treatment of security
deposit for computation of risk weight adjusted value of assets
Please refer to paragraph 10 of
the Non-Banking
Financial Companies Prudential Norms (Reserve Bank) Directions, 1998 contained
in Notification No. DFC 119/DG(SPT)-98 dated January 31, 1998 amended from
time to time on requirement as to capital adequacy.
2. It has been decided that
while calculating the aggregate of funded exposure of a borrower for the purpose
of assignment of risk weight, NBFCs may ‘net-off’ against the total outstanding
exposure to the borrower advances collateralised by cash margins/security deposits/caution
money against which right to set off is available.
3. A copy of the amending Notification
No. DNBS.187/ CGM (PK)-2006 dated September 20, 2006 as also the updated
Notification No DFC 119/DG(SPT)-98
dated January 31, 1998 issued by the Bank is enclosed.
Yours faithfully,
( P. Krishnamurthy)
Chief General Manager In-Charge
NOTIFICATION No. DNBS.187/CGM (PK)-2006
dated September 20, 2006
The Reserve Bank of India, being
satisfied that, in the public interest and to enable the Bank to regulate the
financial system of the country to its advantage, it is necessary to amend the
Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions,
1998, in exercise of the powers conferred upon it under Section 45JA of the
Reserve Bank of India Act, 1934 (2 of 1934) and of all the powers enabling it
in this behalf, hereby directs that the following directions contained in Notification
No.DFC.119/DG(SPT)-98 dated January 31, 1998 stand amended with immediate effect,
namely -
1. In paragraph 10, under explanation
(1), after Note (2), the following Note shall be inserted, namely,-
'(3) While calculating the aggregate
of funded exposure of a borrower for the purpose of assignment of risk weight,
NBFCs may net off against the total outstanding exposure of the borrower advances
collateralised by cash margin/caution money/security deposits against which
right to set-off is available.'
2. In Part D of the format NBS
2 – Half Yearly Statement of capital funds, risk assets/exposures and risk assets
ratio etc., as at the end of March/September i.e. half yearly return (NBS 2)
referred to in paragraph 13 of the Directions, Note (4) may be inserted, namely,-
'(4) Netting may be done in
respect of total outstanding exposure of a borrower by cash margin/caution money/security
deposits against which right to set-off is available.'
( P. Krishnamurthy)
Chief General Manager In-Charge
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