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RBI says NBFCs’ CBLO loans attract no risk weight

RBI says NBFCs’ CBLO loans attract no risk weight
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First Published: Tue, Dec 01 2009. 05 11 PM IST
Updated: Tue, Dec 01 2009. 05 11 PM IST
Mumbai: The Reserve Bank of India clarified on Tuesday that finance companies don’t need to set aside capital as risk weights on loans through Collateralised Borrowing and Lending Obligation (CBLO).
CBLO refers to a borrowing and lending facility offered by the Clearing Corp of India Ltd. where it acts as a counter party and the loans under the CBLO are backed by government securities.
The RBI said there will be no risk weight to these transactions as the loans are fully collateralised at the end of each trading day.
However, the deposits or the margin money that the finance companies keep with CCIL for lending through CBLO will attract a risk weight of 20%, RBI said.
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First Published: Tue, Dec 01 2009. 05 11 PM IST