RBI launches action plan to tackle weak non-banks
“Prompt corrective action” framework echoes rules in place for banks
The Reserve Bank of India has launched a “prompt corrective action” framework for non-bank financial companies (NBFCs), aiming to intervene early to fix weakness in the sector.
The framework specifies three “risk thresholds” based on a firm’s capital position and its ratio of non-performing assets to total assets.
For each threshold that a firm crosses, managers will have to take certain mandatory actions, such as restrictions on dividends, and may also implement “discretionary” actions. The
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