The Reserve Bank of India (RBI) has proposed draft rules for non- banking financial companies (NBFCs) to declare dividend with a view to ensure financial discipline and transparency. Under the proposed norms, only those NBFCs that meet the prescribed prudential requirements would be allowed to declare and distribute dividends.
As per the circular issued, deposit taking NBFCs and systemically important non-deposit taking NBFCs should have Capital to Risk (Weighted) Assets Ratio (CRAR) of at least 15 per cent for last three years, including the accounting year for which it proposes to declare dividend.
The net non-performing (NPA) asset ratio should be less than 6 percent in each of the last three years, including the accounting year for which it proposes to declare dividend.
Non-Systemically Important Non-Deposit taking NBFC should have leverage ratio of less than 7 for the last three years, including the accounting year for which it proposes to declare dividend.
Further, Core Investment Company (CIC) should have Adjusted Net Worth of at least 30 per cent of its aggregate risk weighted assets on balance sheet and risk adjusted value of off-balance sheet items for last three years, including the accounting year for which it proposes to declare dividend.
Comments on the draft circular are invited from NBFCs, industry participants and other interested parties by December 24, 2020.
Click here for detailed draft rules:
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