The Reserve Bank of India has issued a second amendment to its 2025 prudential norms on capital adequacy for non-banking financial companies, clarifying which components can be counted in Owned Fund. The amendment allows free reserves to include quarterly profits, subject to specified conditions, and takes effect immediately. Eligible quarterly profits can be included only if the financial statements undergo a limited review or audit each quarter by the statutory auditors. Those profits must be reduced by the average dividend paid over the last three financial years, using the formula EPt = NPt - 0.25 × D × t, where t runs from 1 to 4, and any losses in the current year must be fully deducted from Owned Fund. The change replaces paragraph 9(iii) of the 2025 master direction.
Reserve Bank of India 2026-03-10
Reserve Bank of India clarifies NBFC owned fund calculation by permitting quarterly profits in free reserves
The Reserve Bank of India has amended its 2025 prudential norms on capital adequacy for non-banking financial companies, clarifying components of Owned Fund. The amendment permits inclusion of quarterly profits in free reserves, contingent on a limited review or audit and adjusted for average dividends and current year losses. This change replaces paragraph 9(iii) of the 2025 master direction and is effective immediately.