'New rules to have short-term effects on profits of NBFCs'

But the phased introduction of the norms is likely to cushion any adverse impact on the NBFCs, he added

The revised regulatory framework for non-banking finance companies (NBFCs) would have a short-term impact on profitability due to the increased provisioning and on account of the revised asset classification norms, but the phased introduction of the norms is likely to cushion any adverse impact on them, said R Gandhi, deputy governor, Reserve Bank of India.

He said according to the data available with the regulator, only five deposit-taking NBFCs may have to bring down their deposit levels, based on the deposit acceptance norms.

At the 110th anniversary celebration of City Union Bank in Chennai, Gandhi said: “The revised regulatory framework has been generally received positively by the market. In the context of the high unsafety levels, these guidelines came as polite regulatory action. ”

He said as on date, out of the total 12,029 registered NBFCs, only 190 NBFCs that are systemically important, non-deposit taking NBFCs and only 241 deposit taking NBFCs will be required to comply with these requirements. The revised regulatory framework is the first step towards a vibrant professionally managed and healthy NBFC sector. He said RBI has restarted issuance of licence to the new NBFCs, which it stopped from April, 2014 due to works for regulatory reforms, has started issuing licences for the new NBFCs from November.

With the new norms, the systemic significance has been made into two broad categories, non-deposit accepting NBFCs with asset size of less than Rs 500 crore and non-deposit accepting NBFCs with assets of Rs 500 crore and above and deposit accepting NBFCs.

There will consequently be as many as 11,598 NBFCs who will be subject to the simplified regulatory framework, with the new regulatory framework brought in this month.