Guidelines on Private Placement of NCDs by NBFCs

NBFCs need to have a policy approved by their Board for planning their resources. This policy should include how often they will arrange private placements and for how long.

Here are the key rules for these private placements:

Each investor must subscribe to at least ₹20,000.
There are two types of private placements for NCDs. One type is for subscriptions under ₹1 crore per investor. The other is for subscriptions of ₹1 crore or more.
For NCDs where each subscription is less than ₹1 crore, there can only be up to 200 subscribers each financial year. These NCDs must be fully secured.
There’s no limit on the number of subscribers for NCDs with subscriptions of ₹1 crore or more. In this case, it’s up to the issuer to decide if they want to secure the NCDs. These unsecured debentures won’t be considered public deposits.
An NBFC can only issue debentures to use the funds in its own operations. They can’t be issued to help the financial needs of related companies, like group entities or parent companies.
NBFCs are not allowed to give loans against the security of their own debentures, whether these are offered through private placement or public issue.

Tax-exempt bonds issued by NBFCs are not covered by these guidelines.

For NCDs that mature in up to one year, different rules apply. These are detailed in the ‘Master Direction on Money Market Instruments’ issued by the Financial Markets Regulation Department of the Reserve Bank.

Introduction to RBI – NBFC Scale Based Regulation

Regulations applicable for NBFC-BL

Regulations applicable for NBFC-ML

Regulatory Instructions for NBFC-UL

Directions for NBFC – Micro Finance MFIs

Specific Directions for NBFC-Factors and NBFC-ICCs

Specific Directions for Infrastructure Debt Funds IDFs-NBFC

Scoring Methodology for Identification of NBFC as NBFC-UL

Regulatory Guidance on Implementation of Ind AS by NBFCsv

Norms on Restructuring of Advances by NBFCs

Early Recognition of Financial Distress

Flexible Structuring of Long Term Project Loans to Infrastructure and Core Industries