MUMBAI, October 15 — The Reserve Bank of India (RBI) on Wednesday issued operational compliance instructions enforcing stricter day-end asset classification and prompt corrective action (PCA) parameters for non-banking financial companies (NBFCs) governed under the Scale-Based Regulation (SBR) architecture.
The supervisory directives mandate all NBFCs categorized in the Middle, Upper, and Top Layers to harmonize non-performing asset (NPA) recognition rules with scheduled commercial banks, requiring automated day-end tracking of overdue accounts, stringent provisioning against real estate exposures, and compulsory bi-annual liquidity stress simulations.
The central bank underlined that as systemically significant non-bank lenders expand retail credit distribution, institutional risk alignment prevents maturity mismatches and contagion risks across the interconnected wholesale and interbank money markets.
The regulatory powers of the RBI under Chapter III-B of the RBI Act 1934, the four-tiered pyramid of Scale-Based Regulation (Base, Middle, Upper, and Top layers), the Prompt Corrective Action framework, and shadow banking oversight represent prominent topics in UPSC Civil Services (GS-III: Banking & Financial Systems) and RBI Grade B examinations.