CURRENT AFFAIRS

Detailed explanation-1: -RBI capped aggregate exposure of NBFCs which are in the upper layer toward one entity at 20% of the capital base. The limit can only be extended by another 5% with the board’s approval.

Detailed explanation-2: -a) The sum of all the exposure values of an NBFC-UL to a single counterparty must not be higher than 20 percent of the NBFC-UL’s available eligible capital base at all times. ii) NBFC-UL shall record in writing the exceptional reasons for which exposure beyond 20% is being allowed in a specific case.

Detailed explanation-3: -Under the existing regulatory framework for NBFCs, Systemically Important NBFCs are required to maintain a regulatory capital of 15% against its risk weighted assets. This 15% capital comprises of 2 types of capital: Tier-1 Capital – Minimum of 10% Tier 2 Capital – Not more than Tier 1.

Detailed explanation-4: -As per the extant regulations, every NBFC is required to maintain a minimum capital ratio of 15 per cent of its aggregate risk-weighted assets (including both on and off- balance sheet items). To further strengthen their capital position, the PCA framework for NBFCs will be made effective from October 1, 2022.

Detailed explanation-5: -The sum of all exposure values of an NBFC-UL to a group of connected counterparties shall not be higher than 25 percent of the NBFC-UL’s available eligible capital base at all times.