Rollout date for LCR norms pushed to Dec 2020: RBI
MUMBAI: Liquidity coverage ratio (LCR) norms for non-banking financial companies (NBFCS) will take effect on December 1, 2020, the Reserve Bank of India (RBI) said on Monday, extending its previous date of April 1.
According to the central bank’s final guidelines on liquidity risk management framework for NBFCS and core investment companies, LCR, which refers to the share of high quality liquid assets to be set aside to meet short-term obligations, will be introduced in stages.
In its final guidelines, RBI said NBFCS with assets of ₹10,000 crore and above will have to maintain a minimum of 50% of LCR as high quality liquid assets (HQLA), while those with assets of ₹5000-10,000 crore will have to maintain 30% LCR.
In both cases, the liquidity coverage ratio will be progressively increased to 100% by December 2024.
The draft guidelines had earlier proposed that all non-banks will have to initially maintain 60% LCR from April 2020.
The changes are in line with the suggestions made by the NBFC sector, which had sought relaxations in LCR norms.
“The liquidity risk management framework for NBFCS finalized by RBI is largely in line with the draft framework proposed earlier this year. The RBI h a s , h o weve r , e n s u r e d a smoother glide path for implementation of the framework by extending the start date for implementation and by phasing out the implementation schedule into two categories of NBFCS. This will ensure that NBFCS get adequate time to adjust to the new regime, especially keeping in mind the current market conditions,” said Nachiket Naik, head, corporate lending, Arka Fincap.