RESERVE BANK OF INDIA DEPARTMENT OF REGULATION …

1 RESERVE BANK OF INDIA DEPARTMENT OF REGULATION CENTRAL OFFICE, 2nd FLOOR, MAIN OFFICE BUILDING SHAHID BHAGAT SINGH MARG, FORT, MUMBAI 400 001 RBI/DNBR/2016-17/45 Master Direction September 01, 2016 (Updated as on March 03, 2022*) (Updated as on February 17, 2020*) (Updated as on November 22, 2019*) (Updated as on August 02, 2019*) (Updated as on May 16, 2019*) (Updated as on April 16, 2019*) (Updated as on February 22, 2019*) (Updated as on May 31, 2018*) (Updated as on February 23, 2018*) (Updated as on November 09, 2017*) (Updated as on July 06, 2017*) (Updated as on March 09, 2017*) (Updated as on March 02, 2017*) (Updated as on February 02, 2017*) (Updated as on October 17, 2016*) Master Direction - Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company ( RESERVE Bank) Directions, 2016 The RESERVE Bank of INDIA (the Bank), having considered it necessary in the public interest, and being satisfied that, for the purpose of enabling the Bank to regulate the financial system to the advantage of the country and to prevent the affairs of any Systemically Important Non-Deposit taking Non-Banking Financial Company (NBFC-ND-SI) and Deposit taking Non-Banking Financial Company (NBFC-D)

2 From being conducted in a manner detrimental to the interest of investors and depositors or in any manner prejudicial to the interest of such NBFCs, and in exercise of the powers conferred under sections 45JA, 45K, 45L and 45M of the RESERVE Bank of INDIA Act, 1934 (Act 2 of 1934) and section 3 read with section 31A and section 6 of the Factoring REGULATION Act, 2011 (Act 12 of 2012), hereby issues to every NBFC-ND-SI and NBFC-D, in supersession of the Notification (VL)-2007 dated February 22, 2007, Notification dated February 12, 2010, Notification (US)-2011 dated November 21, 2011, Notification (US)2011 dated December 02, 2011, Notification (US)-2012 dated July 23, 2012 and 2 Notification (CDS)-2015 dated March 27, 2015 the Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company ( RESERVE Bank) Directions, 2016 (the Directions) hereinafter specified.

3 (J P Sharma) Chief General Manager * Since this Master Direction has been significantly amended, it has been replaced rather than showing the changes in track mode for reader convenience. The changes are listed at the end of Master Direction in any case. 3 Index Section I : Introduction Chapter I Preliminary Chapter II Definition Chapter III Registration Section II : Prudential Issues Chapter IV Capital Requirements Chapter V Prudential Regulations Chapter VI Fair Practice Code Chapter VII Specific Directions to NBFC- Factor and NBFC-ICCs registered under the Factoring REGULATION Act, 2011 Chapter VIII Specific Directions on IDF-NBFC Chapter IX Specific Direction on NBFC-MFI Section III: Governance Issues Chapter X Acquisition/Transfer of Control Chapter XI Corporate Governance Section IV.

4 Miscellaneous Issues Chapter XII - Opening of Branch/Subsidiary/Joint Venture/ Representative Office or Undertaking Investment Abroad by NBFCs Chapter XIII Miscellaneous Instructions Chapter XIV Reporting Requirements Chapter XV Interpretations Chapter XVI Repeal Annex Annex I Timeline for Government NBFCs Annex II - Guidelines on Liquidity Risk Management Framework Annex III Guidelines on Liquidity Coverage Ratio (LCR) Annex III A - Reporting format for NBFCs declaring dividend 4 Annex IV - Schedule to the Balance Sheet of a NBFC Annex V - Data on Pledged Securities Annex VI - Guidelines for Licensing of New Banks in the Private Sector - Definitions Annex VII - Projects under Implementation Annex VIII - Deleted Annex IX Deleted Annex X Deleted Annex XI - Self Regulatory Organization (SRO)

5 For NBFC-MFIs Criteria for Recognition Annex XII - Information about the proposed promoters/ directors/ shareholders of the company Annex XIII - Fit and Proper Criteria for directors of NBFCs Annex XIV - Declaration and Undertaking by Director Annex XV - Form of Deed of Covenants with a Director of an NBFC Annex XVI - Indicative List of Balance Sheet Disclosure Annex XVII - Terms and Conditions Applicable to Perpetual Debt Instruments (PDI) for being Eligible for Inclusion in Tier I capital Annex XVIII - Guidelines for Entry of NBFCs into Insurance Annex XIX - Guidelines on issue of Co-Branded Credit Cards Annex XX - Guidelines on Distribution of Mutual Fund Products by NBFCs Annex XXI - Guidelines for Credit Default Swaps - NBFCs as users Annex XXII Deleted Annex XXIII - Guidelines on Private Placement of NCDs Annex XXIV Deleted Annex XXV Directions on Managing Risks and Code in Outsourcing of Financial Services by NBFCs Annex XXVI - Regulatory Guidance on Implementation of Indian Accounting Standards by Non-Banking Financial

6 Companies 5 Section I Introduction Chapter I PRELIMINARY 1. Short Title and Commencement. (1) These Directions shall be called the Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company ( RESERVE Bank) Directions, 2016. (2) These directions shall come into force with immediate effect. 2. Applicability (1) The provisions of these Directions shall apply to the following: (i) every Systemically Important Non-Deposit taking Non-Banking Financial Company (NBFC-ND-SI) registered with the Bank under the provisions of RESERVE Bank of INDIA Act, 1934 (RBI Act, 1934); (ii) every Deposit taking Non-Banking Financial Company (NBFC-D) registered with the Bank under the provisions of RBI Act, 1934; (iii) every Non-Banking Financial Company Factor registered with the Bank under section 3 of the Factoring REGULATION Act, 2011 and having an asset size of 500 crore and above and every Non-Banking Financial Company - Investment and Credit Company registered with the bank under Section 3 of the Factoring REGULATION Act, 2011.

7 (iv) every Infrastructure Debt Fund Non-Banking Finance Company (IDF-NBFC) registered with the Bank under the provisions of RBI Act, 1934; (v) every Non-Banking Finance Company Micro Finance Institutions (NBFC-MFIs) registered with the Bank under the provisions of RBI Act, 1934 and having an asset size of 500 crore and above; (vi) every Non-Banking Finance Company - Infrastructure Finance Company (NBFC-IFC) registered with the Bank under the provisions of RBI Act, 1934 and having an asset size of 500 crore and above. 6 (2) The Category of NBFCs as mentioned at points (i) to (vi) above are hereafter referred to as applicable NBFCs , for the purpose of these Directions. Specific directions applicable to specific categories of NBFCs registered as NBFC-Factors and NBFC-ICCs registered under Factoring REGULATION Act, 2011, IDF-NBFCs and NBFC-MFIs are as provided for under respective Chapters in these Directions.

8 (3) These Directions shall apply to a non-banking financial company being a Government company as defined under clause (45) of Section 2 of the Companies Act, 2013 (Act 18 of 2013). The directions relating to prudential REGULATION , acceptance of public deposits, corporate governance, conduct of business regulations and statutory provisions etc., shall, however, be followed by the government companies as per the timeline provided in Annex I. Government NBFCs that are already complying with the prudential REGULATION as per the road map submitted by them shall continue to follow the (4) These Directions consolidate the regulations as issued by DEPARTMENT of REGULATION , RESERVE Bank of INDIA . However, any other Directions/ guidelines issued by any other DEPARTMENT of the Bank, as applicable to an applicable NBFC shall be adhered to by it.

9 Chapter II Definitions 3. For the purpose of these Directions, unless the context otherwise requires: (i) "Act" means the RESERVE Bank of INDIA Act, 1934; (ii) "Bank" means the RESERVE Bank of INDIA constituted under section 3of the RESERVE Bank of INDIA Act, 1934 (iii) Break up value means the equity capital and reserves as reduced by intangible assets and revaluation reserves, divided by the number of equity shares of the investee company; (iv) Carrying cost means book value of the assets and interest accrued thereon but not received; (v) Company means a company registered under section 3 of the Companies Act, 1956 or a corresponding provision under Companies Act, 2013; 1 Government Companies were advised vide dated December 12, 2006 to submit to the RESERVE Bank [ DEPARTMENT of Supervision (DoS)] a road map for compliance with the various elements of the NBFC regulations, in consultation with the Government.

10 7 (vi) Companies in the group , shall mean an arrangement involving two or more entities related to each other through any of the following relationships: Subsidiary parent (defined in terms of AS 21), Joint venture (defined in terms of AS 27), Associate (defined in terms of AS 23), Promoter-promotee (as provided in the SEBI (Acquisition of Shares and Takeover) Regulations, 1997) for listed companies, a related party (defined in terms of AS 18), Common brand name, and investment in equity shares of 20 per cent and above. (vii) Concessionaire means a party which has entered into an agreement called Concession Agreement with a Project Authority, for developing infrastructure. (viii) Conduct of business regulations means the directions issued by the Bank from time to time on Fair Practices Code and Know Your Customer.