Capital is the backbone of financial stability. Recognizing this, the Reserve Bank of India (RBI) has tightened and modernized the capital guidelines for Non-Banking Financial Companies (NBFCs) under its Scale-Based Regulatory (SBR) Framework.
The norms focus on minimum Net Owned Fund (NOF), capital adequacy ratios, and progressive strengthening of buffers —all designed to make NBFCs more resilient and aligned with systemic risk.
Minimum Net Owned Fund (NOF) Requirements
The RBI has prescribed different NOF thresholds for various NBFC categories, with a phased glide path up to March 2027.
Minimum Net Owned Fund (NOF) Requirements
The RBI has prescribed different NOF thresholds for various NBFC types:
| Type of NBFC | NOF Before 2023 | NOF by Mar 2025 | NOF by Mar 2027 |
| NBFC-ICC (Investment & Credit) | ₹2 crore | ₹5 crore | ₹10 crore |
| NBFC-MFI (Microfinance) | ₹5 crore | ₹7 crore | ₹10 crore |
| NBFC-Factor | ₹5 crore | ₹7 crore | ₹10 crore |
| NBFC-P2P & NBFC-AA | ₹2 crore | ₹2 crore | ₹2 crore |
| NBFC-IFC, IDF-NBFC | ₹300 crore | ₹300 crore | ₹300 crore |
A phased glide path allows existing NBFCs to gradually raise their NOF by the stipulated dates, strengthening sector resilience.
✅ **Key takeaway:** Smaller NBFCs must scale up gradually, while larger infrastructure and debt-focused NBFCs already operate at higher capital thresholds.
Capital Adequacy Norms
* CRAR Requirement: Most NBFCs must maintain a minimum Capital to Risk-Weighted Assets Ratio (CRAR) of at least 15%.
* Systemically Important NBFCs (assets > ₹500 crore): Stricter norms apply, especially for those in the Middle and Upper regulatory layers.
* Capital Composition: CRAR includes Tier I and Tier II capital, but Tier I capital (equity and free reserves) is the primary safeguard against risk.
Calculation and Compliance
* Net Owned Fund (NOF):
NOF= Paid-up equity capital + Free reserves − Accumulated losses − Intangible assets (as per latest audited balance sheet).
* Regulatory Oversight:
* NBFCs must also comply with exposure limits, liquidity rules, and reporting requirements.
* Banks financing NBFCs must follow exposure norms based on the NBFC’s capital structure.
Why These Guidelines Matter
RBI’s capital norms are designed to:
* Build financial resilience within NBFCs.
* Protect creditors, depositors, and investors from shocks.
* Ensure the sector grows sustainably, without endangering systemic stability.
By March 2027, most NBFCs will have stronger capital foundations, better positioning them to survive and thrive in India’s evolving financial ecosystem.
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Disclaimer:
The information provided herein is exclusively for educational purposes based on publicly available sources and subject to change. The author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial/real estate decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
