The Reserve Bank of India (RBI) on February 25, 2025, issued a notification regarding the Exposures of Scheduled Commercial Banks (SCBs) to Non-Banking Financial Companies (NBFCs) – Review of Risk Weights.
The following have been stated:
• In terms of Paragraph 2.B of the circular ‘Regulatory measures towards consumer credit and bank credit to NBFCs’ dated November 16, 2023, the risk weight on the exposures of SCBs to NBFCs1 was increased by 25 percentage points (over and above the risk weight associated with the given external rating) in all cases where the extant risk weight as per external rating of NBFCs was below 100 per cent.
• On a review, it has been decided to restore the risk weights applicable to such exposures and the same shall be as per the external rating, as specified in Paragraph 5.8.1 of the ‘Master Circular – Basel III Capital Regulations’ dated April 1, 2024, as amended from time to time.
• The above instructions shall come into effect from April 01, 2025. All other instructions of the circulars ibid remain unchanged.
[Notification No. RBI/2024-25/120 DOR.STR.REC.61/21.06.001/2024-25]
