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RBI raises capital adequacy for NBFCs

RBI raises capital adequacy for NBFCs
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First Published: Fri, Aug 01 2008. 08 41 PM IST
Updated: Fri, Aug 01 2008. 08 41 PM IST
Mumbai: The Reserve Bank of India has increased the capital adequacy requirement of non-deposit taking non-banking finance companies, or NBFC-NDs, from 10% to 12% by 31 March 2009, and to 15% by 31 March 2010.
The decision comes in the light of risks associated with highly leveraged borrowings and reliance on short-term funds by some NBFCs to fund long gestation assets.
“Keeping in view the importance of providing adequate capital charge to enhance the cushion for any shocks, it has been decided to increase the minimum capital to risk assets ratio for NBFCs-ND from the present prescription of 10%,’’ RBI said in a statement.
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First Published: Fri, Aug 01 2008. 08 41 PM IST