Reserve Bank of India (RBI) has announced new regulations for non-banking financial companies (NBFCs) regarding deposit withdrawals.
As per the statement, starting January 1, 2025, NBFCs will be required to return the full deposit amount to depositors within the first three months if they request a withdrawal due to an emergency. However, such premature withdrawals will not accrue any interest.
For non-emergency premature withdrawals within the three-month period, NBFCs are allowed to return up to 50% of the deposit amount, but not more than Rs 5 lakh, without paying interest.
Additionally, the RBI has mandated that NBFCs must notify depositors of their deposit’s maturity 14 days in advance, reducing the previous notice period from two months.
The central bank also directed NBFCs to ensure that their audit committees conduct information system audits in accordance with established regulations.
In a move to standardize regulations across the financial sector, the RBI has revised rules affecting both housing finance companies (HFCs) and NBFCs. The minimum liquid asset requirement for deposit-taking HFCs has been increased from 13 percent to 15 percent of public deposits. HFCs must also maintain full asset coverage for public deposits and secure an ‘investment grade’ rating from credit rating agencies at least annually.
HFCs are prohibited from renewing existing deposits or accepting new ones until they obtain an investment grade credit rating. Public deposits must have a maturity period of at least 12 months but no more than 60 months.
