MANU/RMIC/0122/2023

Ministry : Reserve Bank of India

Department/Board : Department of Regulation

Circular No. : DOR.STR.REC.57/21.06.001/2023-2024
                   RBI/2023-2024/85

Date : 16.11.2023

Notification/ Circulars Referred : Governor's Statement dated October 6, 2023 MANU/RPRL/0600/2023;Master Circular - Basel III Capital Regulations MANU/RMIC/0060/2023;Circular 'Risk Weight for Consumer Credit except credit card receivables' dated September 12, 2019 MANU/RMIC/0124/2019;Master Direction - Reserve Bank of India (Non-Banking Financial Company - Scale Based Regulation) Directions, 2023 dated October 19, 2023 MANU/RMIC/0106/2023;Circular 'Risk Weights for exposures to NBFCs' dated February 22, 2019 MANU/RMIC/0022/2019

Citing Reference:
Governor's Statement dated October 6, 2023 MANU/RPRL/0600/2023  Referred

Master Circular - Basel III Capital Regulations MANU/RMIC/0060/2023  Referred

Circular 'Risk Weight for Consumer Credit except credit card receivables' dated September 12, 2019 MANU/RMIC/0124/2019  Referred

Master Direction - Reserve Bank of India (Non-Banking Financial Company - Scale Based Regulation) Directions, 2023 dated October 19, 2023 MANU/RMIC/0106/2023  Referred

Circular 'Risk Weights for exposures to NBFCs' dated February 22, 2019 MANU/RMIC/0022/2019  Referred

Commercial Banks (including Small Finance Banks, Local Area Banks and Regional Rural Banks)
Non-Banking Financial Companies (including HFCs)

Madam/Dear Sir,

Regulatory measures towards consumer credit and bank credit to NBFCs

1. Please refer to Governor's Statement dated October 6, 2023 flagging the high growth in certain components of consumer credit and advising banks and non-banking financial companies (NBFCs) to strengthen their internal surveillance mechanisms, address the build-up of risks, if any, and institute suitable safeguards, in their own interest. The high growth seen in consumer credit and increasing dependency of NBFCs on bank borrowings were also highlighted by Governor in the interactions with MD/CEOs of major banks and large NBFCs in July and August 2023, respectively.

2. In this context, it has been decided to effect the following measures as under:

A. Consumer credit exposure