With an aim to provide greater operational flexibility to non-banking lenders, the Reserve Bank of India (RBI) has created a single category for Non-Banking Financial Companies (NBFCs) by bundling their present three-tier structure.
According to the RBI, NBFCs categorized as Asset Finance Companies (AFC), Loan Companies (LCs) and Investment Companies (ICs), will be merged into a new category called NBFC - Investment and Credit Companies (NBFC- ICCs).
Further, the RBI noted that a deposit taking NBFC-ICC shall invest in unquoted shares of another company which is not a subsidiary company or a company in the same group of the NBFC, an amount not exceeding twenty per cent of its owned fund.
The Apex bank also decided that exposures to all NBFCs, excluding core investment companies, will be risk weighted as per credit ratings.