The Reserve Financial institution Tuesday stated it has been determined to increase the Immediate Corrective Motion (PCA) framework for NBFCs to Authorities NBFCs (besides these in Base Layer) with impact from October 1, 2024, based mostly on the audited financials as on March 31, 2024, or thereafter.
After the federal government owned NBFCs are put below the PCA framework there can be not solely restrictions on dividend distribution/remittance of earnings; but additionally restrictions on promoters/shareholders to infuse fairness and discount in leverage; and on the difficulty of ensures or taking up different contingent liabilities on behalf of group corporations.
“The Framework has since been reviewed and it has been determined to increase the identical to Authorities NBFCs (besides these in Base Layer) with impact from October 1, 2024, based mostly on the audited financials of the NBFC as on March 31, 2024, or thereafter,” the RBI round learn.
Among the main authorities owned non-banking monetary corporations (NBFCs) embrace PFC, REC, IRFC and IFCI.
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The NBFCs have been rising in measurement and have substantial interconnectedness with different segments of the monetary system. Accordingly, the RBI in 2022 determined to place in place a PCA Framework for NBFCs to additional strengthen the supervisory instruments relevant to NBFCs.
The target of the PCA Framework is to allow supervisory intervention at acceptable time and require the supervised entity to provoke and implement remedial measures in a well timed method, in order to revive its monetary well being.
The framework can be supposed to behave as a device for efficient market self-discipline. It doesn’t preclude the apex financial institution from taking every other motion because it deems match at any time along with the corrective actions prescribed within the Framework.
The PCA Framework for NBFCs got here into impact from October 1, 2022, based mostly on the monetary place of NBFCs on or after March 31, 2022.
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Up to date: 10 Oct 2023, 05:22 PM IST
Supply: Live Mint