RBI relaxed lending rules for NBFCs for Agriculture, MSMEs and Affordable Housing


Now the banks were allowed on-lending to agriculture as much as Rs 10 lakhs and micro and small businesses as much as Rs 20 lakh and housing up to Rs 20 lakh per borrower to be categorized as priority sector lending.
“so as to further increasing the credit score waft to exact priority sectors which make contributions vastly to the financial growth in phrases of export and employment, and realizing the role played via NBFCs in offering credit to these sectors, it has been made up our minds to allow subject to certain obligations, financial institution lending to registered NBFCs (instead of MFIs) for on-lending to Agriculture (investment credit score) as much as Rs 10.0 lakhs; Micro and Small corporations as much as Rs 20.0 lakh and housing up to Rs 20.0 lakh per borrower (up from Rs10.0 lakh at present) to be categorized as priority sector lending,” RBI said.

Exact recommendations on the above measures might be issued via the tip of August 2019.

The RBI additionally eased bank’s disclosure limits to support the NBFC sector beneath stress. The vital bank has raised the financial institution’s publicity to restrict to a single NBFC to 20% of the Tier-I capital of the bank against the current 15%.

“underneath the revised instructional materials on gigantic exposure framework that got here into effect from April 1, 2019, a financial institution’s publicity to a single NBFC is restricted to 15 per cent of its Tier I capital, while for entities within the different sectors the publicity limit is, 20 percent of Tier I capital of the financial institution, which can be advanced to 25 percent by using banks’ Boards below best situations,” RBI said.

“As a step closer to the harmonization of the counterparty exposure limit to single NBFC with that of the general limit, it has been made up our minds to raise a financial institution’s exposure limit to a single NBFC to 20% of Tier-I capital of the financial institution,” RBI added

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