The Reserve Bank of India has capped financing of initial public offers (IPO) by non-banking finance companies (NBFC) at Rs 1 crore per borrower. The new guidelines would come effective from April 1, 2022. "There shall be a ceiling of Rs 1 crore per borrower for financing subscription to Initial Public Offer (IPO). NBFCs can fix more conservative limits," the RBI notification read.
"The instructions relating to ceiling on IPO funding given vide para 3.1(d) of the Annex shall come into effect from April 01, 2022," it added. The RBI issued revised regulatory framework for scale-based regulation (SBR) for NBFCs, which will come into effect from October 1, 2022. "As the SBR framework encompasses different facets of regulation of NBFCs covering capital requirements, governance standards, and prudential regulation, it has been decided to first issue an integrated regulatory framework for NBFCs under SBR providing a holistic view of the SBR structure, and introduce set of fresh regulations and respective timelines.
The detailed guidelines as delineated will be issued subsequently," the RBI notification said. Under the SBR, the central bank also decided to increase to Rs 10 crore regulatory minimum net owned fund (NOF) for NBFC investment and credit companies (NBFC-ICC), NBFC microfinance institution (NBFC-MFI) and NBFC-Factors in a phased manner. For NBFC-peer to peer lending platform (NBFC-P2P), NBFC-account aggregator (NBFC-AA), and NBFCs with no public funds and no customer interface, the NOF will continue to be Rs 2 crore. The RBI clarified that there is no change in the existing regulatory minimum NOF for NBFC-infrastructure debt fund (NBFC-IDF), infrastructure finance companies (NBFC-IFCs), mortgage guarantee companies (MGCs), housing finance companies (HFC), and standalone primary dealers (SPD).