RBI has issued an updated master circular on bank
financing to Non-Banking Financial
Companies (“NBFCs”)
consolidating regulations regarding financing of NBFCs by banks.
This master circular is replacing the master circular issued by the
RBI in 2015 (“2015 Master Circular”)
on the captioned.
Some key changes are as follows:
1) It has been clarified that Housing Finance Companies
(“HFCs”) are covered under the ambit
of this circular.
2) It has been clarified that banks may take their credit
decision based on usual factors in relation to Micro Finance
Companies, Securitisation and Reconstruction Companies, Mutual
Benefit Companies and Mortgage Guarantee Companies.
3) In line with NBFC-Factors Directions, the minimum limit for
receivable purchased/financed or income generated from factoring
activity of factoring companies has been reduced from 75% to 50%
for being eligible to receive bank finance.
