Banking
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NFRS 9 - ECL Guidelines – Nepal Rastra Bank
Financial Instruments standard was initially set to be effective from July 16, 2021. However, challenges like the COVID-19 pandemic, limited time, and lack of technical expertise led to its full implementation being postponed to the fiscal year 2080/81 for banks and financial institutions.
Placement of Deposits with Other Banks/Institutions by Urban Co-operative Banks
Scheduled Urban Co-operative Banks (UCBs) that meet certain criteria can accept deposits from other UCBs. These deposits should be part of specific service arrangements like clearing, foreign exchange transactions, or non-fund based facilities.
Capital Charge for Credit Risk – Basel III
In banking, managing credit risk is crucial, especially when it involves large amounts of money. The Standardized Approach is often used, where external credit ratings guide how much risk each credit carries.
Introduction to RBI – NBFC Scale Based Regulation
The Reserve Bank of India's (RBI) regulations for Non-Banking Financial Companies (NBFCs) based on their size, activities, and risk levels.
Guidelines on Perpetual Debt Instruments
Non-deposit taking NBFCs can issue Perpetual Debt Instruments (PDI) as bonds or debentures. These can be part of Tier 1 or Tier 2 capital for capital adequacy.
Operational Risk Capital Charge Calculation Methods– Basel - III
There are three methods to calculate the capital needed for operational risks in financial institutions. These are: Basic Indicator Approach (BIA): This is the approach most financial institutions start with. Standardized Approach (TSA): A more complex method.
Investment in Non-SLR Securities by Urban Co-operative Banks
Urban Co-operative Banks (UCBs) can invest in various non-SLR instruments: Corporate bonds rated "A" or higher.
Balance Sheet Disclosure Guidelines for NBFCs in Middle Layer and Above
NBFCs must include certain items in their Notes to Accounts (NTA). These are additional to other disclosure requirements.
Capital Charge for Market Risk – Basel - III
Market risk refers to the possibility of financial loss due to changes in market prices. It affects both on-balance sheet and off-balance sheet positions.
RBI’s Directions for the Investment Portfolio of Commercial Banks
The Reserve Bank of India's Directions for the Classification, Valuation, and Operation of the Investment Portfolio of Commercial Banks, established in 2023.
Regulations applicable for NBFC-BL
A non-banking financial institution (NBFC), specific financial requirements must be met. The Reserve Bank of India (RBI) has set these requirements. For NBFCs like NBFC-ICC, NBFC-MFI, and NBFC-Factor, the required Net Owned Fund (NOF) is ₹10 crore.
Investment Portfolio of Primary (Urban) Co-operative Banks
Urban Co-operative Banks (UCBs) need to have a clear investment policy. This policy should be approved by their Board of Directors. It should match the bank's size, business complexity, risk management skills, staff, and technology.
Guidelines on Distribution of Mutual Fund Products by NBFCs
They must adhere to SEBI's guidelines and code of conduct for mutual fund distribution. They should not force customers to choose any specific mutual fund product, especially if it's sponsored by the NBFC. Customers should have the freedom to choose.
Disclosures in Financial Statements – Notes to Accounts of NBFCs
The disclosure formats provided here are designed for all types of Non-Banking Financial Companies (NBFCs), including Investment and Credit Companies, Housing Finance Companies, and Core Investment Companies.
Classification of Investments
Urban Co-operative Banks (UCBs) must organize their investment portfolio, including both SLR and non-SLR securities, into three groups: 'Held to Maturity' (HTM), 'Available for Sale' (AFS), and 'Held for Trading' (HFT).
Investments in Government Securities by Urban Co-operative Banks
Urban Co-operative Banks (UCBs) must follow these rules when dealing with Government Securities
Restrictions on holding shares in other Co-operative Societies
The Banking Regulation Act of 1949, as it applies to Co-operative Societies, sets rules for co-operative banks about owning shares in other co-operative societies.
Accounting and Provisioning by Urban Co-operative Banks
Urban Co-operative Banks (UCBs) should recognize income on an accrual basis for: Government Securities and corporate bonds with regular interest payments and no arrears.
Key takeaways from the RBI notification dated 12th Nov 2021
The Reserve Bank of India vide its notification dated 12th Nov 2021 regarding Prudential norms on Income Recognition, Asset Classification and Provisioning (IRACP) pertaining to Advances have provided clarifications which is likely to have a significant impact on the provisioning for all financial institutions including Banks and NBFCs.
Guidelines on Liquidity Coverage Ratio (LCR)
These guidelines apply to non-deposit taking NBFCs with assets of ₹5,000 crore and above, and all deposit taking NBFCs, except for certain types like Core Investment Companies and others. They outline how to calculate the Liquidity Coverage Ratio (LCR).
Guidelines for Entry of NBFCs into Insurance
NBFCs registered with the Reserve Bank can start insurance agency business without risk participation. They don't need approval from the Reserve Bank
Guidelines on Liquidity Risk Management Framework
Non-deposit taking NBFCs with assets of ₹100 crore and above, Core Investment Companies, and all deposit-taking NBFCs must follow these guidelines.
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.
Flexible Structuring of Long Term Project Loans to Infrastructure and Core Industries
Long-term loans, like those for 25 years, given to infrastructure or core industry projects, need to be structured carefully. First, we must ensure the project is financially viable.
Norms on Restructuring of Advances by NBFCs
Non-Banking Financial Companies (NBFCs) play a crucial role in the financial system, especially in the restructuring of advances.
Guidelines on Issue of Co-Branded Credit Cards
The Reserve Bank has decided to allow certain NBFCs to issue co-branded credit cards with banks. This is to diversify their business areas.
Leverage Ratio Framework – Basel III
The Leverage Ratio Framework is a key part of our approach to making the banking system safer. It was developed in response to the global financial crisis, where we saw that banks had too much debt, both on their books and in less visible ways.
Guidelines for the SREP of RBI and ICAAP of AIFIs– Basel - III
The Basel capital adequacy framework is built on three pillars. The first pillar sets the minimum capital requirements, including operational, market, and credit risk. The second pillar, the Supervisory Review Process (SRP), focuses on establishing and reviewing risk management systems in AIFIs.
Guidelines for Internal Capital Adequacy Assessment Process (ICAAP) – Basel III
The main goal of the supervisory review process is to make sure that financial institutions, specifically All India Financial Institutions (AIFIs), hold enough capital to cover all the risks in their business.
Large Exposures Framework for NBFCs - Upper Layer - NBFC-UL
Prudential guidelines aim to address credit risk concentration in non-banking financial companies (NBFCs). These guidelines focus on identifying and managing large exposures, which refer to the sum of all exposure values of an NBFC-UL (an NBFC placed in the upper layer) to a counterparty or group of connected counterparties.
Regulations applicable for NBFC-ML
Non-Banking Financial Companies (NBFCs) must maintain a minimum capital ratio. This ratio, made up of Tier 1 and Tier 2 capital, should be at least 15 percent of their risk-weighted assets.
Self-Regulatory Organization (SRO) for NBFC-MFIs – Criteria for Recognition
The SRO should have at least one-third of registered NBFC-MFIs as its members at the time of seeking recognition.
Regulatory Instructions for NBFC-UL
NBFCs are required to maintain a Common Equity Tier 1 capital. This should be at least 9 percent of their Risk Weighted Assets. The CET1 ratio is calculated by dividing the Common Equity Tier 1 capital by the Total Risk Weighted Assets.
Resource Raising Norms – Basel III
All-India Financial Institutions (AIFIs) are key players in our financial markets. They help in gathering funds and allocating resources.
Significant Investments of AIFIs – Basel III
AIFIs need to develop investment policies approved by their Board. These policies should address investments in financial entities, considering the limits set in the Large Exposure Norms.
Regulatory Guidance on Implementation of Ind AS by NBFCs
Companies wanting to do factoring business must apply to the Reserve Bank for a Certificate of Registration (CoR) as an NBFC-Factor.
Guidelines for Credit Default Swaps - NBFCs as Users
In these guidelines, we use specific terms. A 'Credit event payment' is what the credit protection seller pays to the buyer after a credit event. It's paid through physical settlement. The 'Underlying asset/obligation' is what the buyer wants to protect.
Shifting Among Categories in the Investment Portfolio of UCBs
Urban Co-operative Banks (UCBs) can move investments to or from the Held to Maturity (HTM) category. This requires approval from the Board of Directors and can be done once a year, at the start of the accounting year.
Elements of Regulatory Capital – Basel III
The regulatory capital is divided into two main types: Tier 1 and Tier 2. Tier 1 Capital, also known as going-concern capital, includes Common Equity Tier 1 and Additional Tier 1 capital. Tier 2 Capital, or gone-concern capital, is another component.
Specific Directions for NBFC-Factors and NBFC-ICCs
Existing NBFC-ICCs that want to start factoring must also apply if they meet certain criteria like not holding public deposits, having assets of ₹1,000 crore or more, and meeting the Net Owned Funds (NOF) requirement.
Managing Risks and Code of Conduct in Outsourcing of Financial Services by NBFCs
Outsourcing in NBFCs involves using third parties to perform activities traditionally handled by the NBFC itself.
Credit Risk Mitigation – Basel III
In the realm of credit risk mitigation, when a financial institution (AIFI) invests in a security with a specific rating from an approved agency, the risk weight of that investment reflects the rating.
Specific Directions for Infrastructure Debt Funds IDFs-NBFC
An IDF can be established either as a trust or a company. A trust-based IDF is known as IDF-Mutual Fund (MF) and comes under the regulation of SEBI. On the other hand, a company-based IDF is registered as an IDF-NBFC and is regulated by the Reserve Bank.
Valuation of Investments of Urban Co-operative Banks
Investments in HTM don't need market valuation. They are carried at acquisition cost if it's less than face value.
Prudential Norms for Investment Portfolio Management by AIFIs – Basel III
The Reserve Bank provides guidelines for All India Financial Institutions (AIFIs) regarding their investment portfolios. These guidelines reflect the latest developments in financial markets and align with international practices.
Early Recognition of Financial Distress
Non-Banking Financial Companies (NBFCs) must quickly identify signs of stress in loan accounts. On detecting a default, these accounts should be categorized as special mention accounts (SMA) based on the duration of overdue payments.
Guidance for computation of ECL - NFRS-9
Banks must consider factors like Probability of Default, Loss Given Default, and Exposure at Default when computing ECL. They should use historical data, forward-looking information, and consider regulatory backstop measures.
Fit and Proper Criteria for Directors of NBFCs
NBFCs need to ensure their Directors are suitable for their roles. This involves checking their qualifications, expertise, track record, and integrity.
Directions for NBFC - Micro Finance MFIs
Non-Banking Financial Company – Micro Finance Institutions (NBFC-MFIs) and other NBFCs offering microfinance loans must follow specific guidelines. These are in addition to the general instructions they already comply with.
Simple Guide on Minimum Capital Requirements - Basel III
Financial institutions like banks and investment firms around the world follow certain rules to manage risks. These rules are pretty similar everywhere. One popular set of rules is Basel III. It's like a safety net for these institutions. It helps them stay strong in tough times and keeps an eye on risks in the financial world.
Guidelines on implementation of Ind AS by NBFCs
The Reserve Bank of India has released guidelines for the implementation of Indian Accounting Standards (Ind AS) by Non-Banking Financial Companies (NBFCs) and Asset Reconstruction Companies (ARCs).
Scoring Methodology for Identification of NBFC as NBFC-UL
The top 50 NBFCs, excluding the ten largest by asset size (which are automatically in the Upper Layer), are selected based on their total exposure, including off-balance sheet exposure.
Basel III Reforms - Introduction
Basel III reforms strengthen the rules for individual banks to make them more resilient during tough times. They also focus on reducing risks across the banking sector and over time. These regulations raise the quality and amount of capital that banks must have to handle losses, introduce a backstop for measuring risk, and set higher standards for how banks are supervised and must report their financial information. The regulations also include buffers to protect against excessive credit growth.
Permitted exposures & other prudential exposure limits – Basel III
Financial institutions should set their own internal limits for how much they commit to specific sectors, like textiles, chemicals, engineering, and so on. This helps ensure that their exposures are spread out across different areas.
Accounting and Provisioning in AIFIs – Basel III
AIFIs should recognize income on an accrual basis for specific securities, including those guaranteed by the Central or State Government, provided interest is regularly serviced and not in arrears.
Exemptions, Interpretations and Repeal – Basel III
The Reserve Bank has the authority to offer flexibility when it comes to following these Directions. If it finds that there's a significant reason - like preventing hardship or for other fair reasons - it can decide to give more time to an All-India Financial Institution (AIFI) to comply with these rules.
Introduction to Basel III
The Basel III reforms are an international regulatory framework that was introduced by the Basel Committee on Banking Supervision (BCBS) in December 2010 to strengthen the resilience of banks and banking systems in times of financial and economic stress
Large Exposures Framework – Basel III
In this chapter, we discuss how regulators and financial entities use exposure limits to handle concentration risk. These guidelines focus on the prudential norms for credit and capital market exposures of All India Financial Institutions (AIFIs).
Operational Aspects of ICAAP – Basel III
The operational aspect delves into the range of risks that All India Financial Institutions (AIFIs) should typically consider in their Internal Capital Adequacy Assessment Process (ICAAP).