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NBFC, Regulators of NBFCs, Systematic risk means the possibility of loss…

- - - - asset liability mismatch short term borrowing invested in infrastructure projects- long gestation period
      - repercussions
        
        lowered credibility - other NBFCs
    - - allegations promoters engaged - siphoned off money
        
        share of DHFL plummeted
        
        INR 900 crore debt
  - - - need
        
        consistency in regulation of Banks and NBFCs
        
        ex : NBFC Capital Adequacy Ratio (CAR) similar banks
  - - - not fit in traditional defina.
        
        need reforms NBFC
        
        seamless operation-- banks, NBFC, FinTech
- - - - loans and advances, acquisition of shares/stocks/bonds/debentures/securities issued by govnt or local bodies, other marketable securities like hire- purchase, insurance business, chit funds
- - - - creating four layer regulatory framework
        
        proposed NBFC categories
        
        top layer - NBFC needing higher regulation
        
        upper layer- systematically imp. NBFC-bank like regualtion
        
        middle layer- deposit taking NBFC, HFCs, Infra debt funds, etc- arbitrages plugged
        
        base layer- Non- deposit taking NBFCs, P2P lending platform
      - classi. change for NPAs
        
        (NPAs) of base layer NBFCs :180 days to 90 days overdue.
    - - Balance between flexibility of NBFCs and the potential systemic risks
        
        4 layer
      - Improved trust and confidence in the NBFC Sector
        
        Stricter regulation by RBI & early reporting of NPAs
        
        results confidence incre.
        
        incre. share prices, attracting more depositors & better credit ratings
      - Increased transparency in the sector
- - - - enforcement agencies
        
        state government