RBI wants tighter capital rules for non-bank lenders

MUMBAI Wed Dec 12, 2012 8:26pm IST

The Reserve Bank of India (RBI) logo is pictured outside its head office in Mumbai July 26, 2011. REUTERS/Danish Siddiqui/Files

The Reserve Bank of India (RBI) logo is pictured outside its head office in Mumbai July 26, 2011.

Credit: Reuters/Danish Siddiqui/Files

Related Topics

MUMBAI (Reuters) - The Reserve Bank of India (RBI) wants non-bank lenders to set aside more capital for lending in stock and real estate sectors and to improve the quality of liquid assets they hold to reduce systemic risk from the sector.

The non-bank lending segment has not been as strictly regulated as banks.

The RBI proposed in its draft guidelines to raise the Tier I capital requirement for non-bank lending institutions with significant exposure in stocks, real estate, and commodities to 12 percent from the minimum of 7.5 percent now.

"The objectives of the working group were to address issues relating to regulatory arbitrage and systemic risk, so as to create a strong and resilient non-banking financial sector," the RBI panel which suggested the new rules said in a release on Wednesday.

The central bank also asked the non-bank lenders to invest in actively traded debt securities of not lower than AA rating for better liquidity management.

The RBI has sought feedback on these draft rules at the latest by January 10.

(Reporting by Suvashree Dey Choudhury)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Markets

REUTERS SHOWCASE

Canada Shooting

Canada Shooting

Attack on parliament, killing of soldier stun Canada's capital.  Full Article 

Earnings Season

Earnings Season

Wipro sees rosier end to year as U.S. clients spend.  Full Article 

Business Climate

Business Climate

Fears for tough penalties grow as India cleans up business  Full Article 

New Email Service

New Email Service

Google launches new email service dubbed "Inbox".  Full Article 

DLF Appeals

DLF Appeals

DLF seeks interim relief from capital market ban  Full Article 

Falling Oil Prices

Falling Oil Prices

Indian consumers respond to softer oil, food prices  Full Article 

Book Keeping

Book Keeping

RBI fires warning shots on companies' lack of FX hedging.  Full Article 

Policy Repo Rate

Policy Repo Rate

Most external members suggested rate cut in RBI's Sept review.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage