RBI allows lending by commercial banks to NBFCs and SFBs to NBFC-MFIs

  • Blog|FEMA & Banking|News|
  • 67 Views
  • |
  • < 1 minute
  • By Taxmann
  • |
  • Last Updated on 17 May, 2022

RBI allows lending by commercial banks

Circular No. RBI/2022-23/50 FIDD.CO.Plan.BC.No.5/04.09.01/2022-23, Dated: 13.05.2022

The RBI has decided to allow the Lending by Commercial Banks to NBFCs and Small Finance Banks (SFBs) to NBFC-MFIs, for on-lending to certain priority sectors on an ongoing basis up to March 31, 2022. Further, SFBs are allowed to lend to registered NBFC-MFIs and other MFIs which have a ‘gross loan portfolio’ (GLP) of up to Rs 500 crore as on March 31 of the previous financial year, for the purpose of on-lending to the priority sector.

Bank credit to NBFCs (including HFCs) for on-lending will be allowed up to an overall limit of 5% of an individual bank’s total priority sector lending in case of commercial banks. In case of SFBs, credit to NBFC-MFIs and other MFIs (Societies, Trusts, etc.) which are members of RBI recognized ‘Self-Regulatory Organisation’ of the sector, will be allowed up to an overall limit of 10% of an individual bank’s total priority sector lending.

Further, in case the GLP of the NBFC-MFIs/other MFIs exceeds the stipulated limit at a later date, all priority sector loans created prior to exceeding the GLP limit will continue to be classified by the SFBs as PSL till repayment/maturity, whichever is earlier.

Click Here To Read The Full Circular

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

Leave a Reply

Your email address will not be published. Required fields are marked *

Everything on Tax and Corporate Laws of India

To subscribe to our weekly newsletter please log in/register on Taxmann.com

Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied