NBFC ICC New Regulation

On 22^nd February 2019, the Reserve Bank of India (RBI) released a notification on “Harmonization of the Non Banking Financial Companies (NBFCs) Categories”. Under this, RBI has decided to merge three different categories of NBFCs- asset finance, loan companies, and investment companies into one named “NBFC – Investment And Credit Company (NBFC-ICC)”. This step has been taken by the authority to ease the operational flexibility of NBFCs considering the principle of “activity-based regulation” rather than “entity-based regulation”.

What will be the impact of the introduction of NBFC – Investment And Credit Company (NBFC-ICC)?

RBI provided greater operational flexibility to NBFCs by merging asset finance companies, loan companies, and investment companies into “NBFC- Investment And Credit Company”. With this, NBFCs are going to have more freedom in planning their asset allocation. Before the introduction of this new category, NBFCs had to maintain the productive and unproductive asset distinction, besides this; NBFCs also had to maintain personal loans, loans against properties or loans against shares within the limit of 60%. Now, they have got relaxation.