Assocham for raising provisioning to 0.30% of asset for NBFC
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Assocham for raising provisioning to 0.30% of asset for NBFC

Last Updated: Friday, January 11, 2013, 23:01
 
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Assocham for raising provisioning to 0.30% of asset for NBFC
New Delhi: Provisioning on standard assets for NBFCs should be raised to 0.30 percent compared to 0.40 percent recommended by draft guidelines based on the Thorat Committee, industry body Assocham said Friday.

"Instead of implementing the same from March 31, 2014, the time limit of 3 years may be considered," the chamber said in its suggestions submitted to the Reserve Bank.

The provisioning on standard assets for NBFCs is 0.25 percent at present.

Income Tax benefits should also be brought on par with banks for NBFCs, it said, adding, banks get benefits on their entire provisioning while NBFCs get that benefit on written off books only.

However, the RBI draft norms has proposed different tax treatment for different form of Non Banking Financial Companies (NBFCs).

ECB entitlement of Infrastructure Finance Companies (IFCs) may be enhanced to 30 percent of permissible leverage, it added.

It also suggested that NBFCs with asset size below Rs 1,000 crore and not accepting public funds, directly or indirectly be exempted from registration.

As per the RBI draft norms on NBFCs released last month, NBFCs would need RBI's prior approval before making changes in their ownership control.

The RBI's draft guidelines based on Usha Thorat Committee report also seek to make mandatory for all deposit-taking NBFCs to obtain credit rating.

Appointment of CEOs of NBFCs with asset size of Rs 1,000 crore and above would require the RBI approval, it added.

The draft norms said existing unrated NBFCs-Deposit taking will be given a period of one year to get rated, "thereafter, they would not be allowed to accept any fresh deposits or renew existing deposits, till they get themselves rated," it said.

On change in control or transfer of shareholding, the draft said that all registered NBFCs should take prior approval from the RBI where there is a change in control and increase of shareholding to the extent of 25 percent by individuals or groups, directly or indirectly.

PTI



First Published: Friday, January 11, 2013, 23:01


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