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NBFC Rules News: RBI’s big decision, changed the rules for giving loans, know when will be applicable

NBFC Rules News: The Reserve Bank of India (RBI) said that non-banking financial companies (NBFCs) should lend to the real estate sector only after they have got all the necessary approvals for their projects. RBI made it clear that NBFCs will need to ensure approval of their projects from the government and other regulatory authorities before sanctioning loans.

Rules will be applicable from October 2022
Apart from this, the RBI also said that NBFCs should not give loans of Rs 5 crore and more to their directors, including their chairman and managing director or their relatives and related entities. These rules will come into effect from October.

RBI gave these instructions
In a notification issued on revised regulatory restrictions on NBFCs for lending, the central bank said that for loans of less than Rs 5 crore, these borrowers can be sanctioned through appropriate authority but the matter will be taken up with the board of directors. Will need to bring

“The NBFCs, taking into account the loan applications of the real estate sector, shall ensure that the borrowers concerned get the necessary approvals from the government/local authority/other statutory authorities for their projects,” the RBI said. The apex bank said that the loan can be sanctioned under normal circumstances but disbursement will happen only after the borrower has obtained necessary approvals from the government/other statutory bodies regarding his project. These guidelines will come into effect from October 1, 2022 and will be applicable to medium tier (ML) and high level (UL) NBFCs.

What are basic level NBFCs
Basic level (BL) NBFCs are those which do not accept deposits and have assets less than Rs 1,000 crore. On the other hand, mid-level non-banking financial companies also do not accept deposits, but their asset size is Rs 1,000 crore or more. At the same time, high-end NBFCs are those which have been identified by the Reserve Bank to increase regulatory requirements.

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