RBI Act 1934

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RBI’S REVISED REGULATORY FRAMEWORK FOR NBFCS

Introduction

In the backdrop of recent stress in the financial sector, especially in the speciality finance (i.e. NBFC) space, the Reserve Bank of India (“RBI”) has sought to address potential systemic risks by issuing a discussion paper on ‘Revised Regulatory Framework for NBFCs – A Scale-Based Approach’ (“Discussion Paper”) on January 22, 2021. The apex bank, through the Discussion Paper, has introduced a scale-based approach to the regulation of non-banking financial companies. Owing to their growing significance, linkages with the banking and capital markets sectors, and complexity in operations, the Discussion Paper proposes a four-tiered regulatory structure for NBFCs, based on proportionality of the NBFCs.
Continue Reading FIG Papers (No. 2) : RBI’s Revised Regulatory Framework for NBFCs : Industry Implications

Housing Finance Companies - Proposed changes by RBI

The Central Government had, with effect from August 09, 2019, transferred regulatory powers of the Housing Finance Companies (“HFCs”) from the National Housing Bank (“NHB”) to the Reserve Bank of India (“RBI”). It is further stated that the RBI will review the extant of regulatory framework applicable to HFCs and issue the same in due course.  Until such time, HFCs were required to comply with the directions and instructions issued by NHB.[1]

Pursuant to the above and in order to increase the efficiency of HFCs, the RBI has now placed a draft of the changes proposed in the regulations applicable to HFCs for public comments till July 15, 2020, which we have briefly summarised below:
Continue Reading Housing Finance Companies – Proposed changes by RBI

Reserve bank of India - RBI vs Indian Government

At the heart of any modern democracy lies the doctrine of separation of powers, which ensures division of responsibilities and also structurally validates a key principle of governance, i.e., allowing each institution to function autonomously, while still maintaining accountability within the larger legislative framework. In codifying its own unique (and somewhat limited) interpretation of this doctrine, the Constitution of India delineates functions of the Union and the states, allowing Parliament to legislate on the functions of key agencies such as the Central Bureau of Investigation and the Reserve Bank of India (Entry 38, Seventh Schedule).
Continue Reading The Executive, The Central Bank and The Fault in their Stars