The Reserve Bank of India has issued the Second Amendment Directions to its 2025 Non-Banking Financial Companies Concentration Risk Management Directions, changing how NBFCs determine capital for compliance with credit and investment concentration limits. The amendments align the definitions of owned fund and Tier 1 capital with the 2025 NBFC Prudential Norms on Capital Adequacy Directions, and require an NBFC to obtain an external auditor's certificate after a capital augmentation and submit it to the Department of Supervision before any addition to capital funds can be counted for concentration norms. For compliance with the concentration norms in paragraphs 13 and 14 of the master direction, applicable Tier 1 capital must now be determined using the NBFC's latest available financial statements, whether audited or subject to limited review. The directions also clarify that Tier 1 capital in this context is the term defined in paragraph 10 of the 2025 capital adequacy directions. The changes apply to all NBFCs and took effect immediately.
Reserve Bank of India 2026-03-10
Reserve Bank of India revises NBFC concentration risk rules and requires auditor certificate before Tier 1 capital additions are recognised
The Reserve Bank of India has amended its 2025 Non-Banking Financial Companies (NBFC) Concentration Risk Management Directions, aligning definitions of owned fund and Tier 1 capital with the 2025 NBFC Prudential Norms on Capital Adequacy. NBFCs must now use the latest financial statements to determine Tier 1 capital for compliance with concentration norms and obtain an external auditor's certificate post-capital augmentation. These changes are effective immediately.