Page 55 - BFSI CHRONICLE 10 th Issue (2nd Annual Issue ) 23062 COPY.indd

BFSI Chronicle, 2 Annual Issue, 10 Edition July 2022
nd
th
The Insolvency and Bankruptcy Code (IBC) are already seeing improvement of consumer
was introduced with the aim of resolution and sentiment and optimism aiding economic
reorganization of insolvent companies, while recovery across the world.
ARCs are set up for clearing up NPAs. ARCs
primarily deal with recovery, while the IBC b) Scale Based Regulatory Framework
These guidelines shall be effective from
seeks for a resolution, wherein creditors are October 01, 2022. The instructions relating
given the chance to make insolvency resolution
an economically viable process and entities can to ceiling on IPO funding shall come into
effect from April 01, 2022. RBI Circular dated
apply for insolvency, bankruptcy or liquidation.
Although some NBFCs are performing well in October 22, 2021
India, others are lagging. These companies need The contribution of NBFCs towards supporting
to cross-examine their performance on various real economic activity and their role as a
parameters of the sector and work to eradicate supplemental channel of credit intermediation
the anomalies. Looking at the financial needs alongside banks is well recognized. Over the
of the Indians there is a wide scope for NBFCs years, the sector has undergone considerable
in every relevant sector and those companies evolution in terms of size, complexity, and
which have a futuristic approach will reap interconnectedness within the financial
the benefits. Some of the banks are relatively sector. Many entities have grown and become
well-capitalised and are being supported by systemically significant and hence there is a
governments. need to align the regulatory framework for
NBFCs keeping in view their changing risk
Targeting rural and backward areas, the
NBFCs have the privilege to offer small-ticket profile. As the SBR framework encompasses
loans to the deprived but deserving sections. different facets of regulation of NBFCs
covering capital requirements, governance
NBFCs have emerged as a large employment
generator by lending their support to small standards, prudential regulation, etc., it has
been decided to first issue an integrated
scale businesses and companies. To retain their
growth and momentum they need to keep regulatory framework for NBFCs under SBR
upgrading themselves. Taking a cue from the providing a holistic view of the SBR structure,
set of fresh regulations being introduced and
performance of all various parameters, the
NBFC companies can strive to improve their respective timelines. Regulatory structure for
NBFCs shall comprise of four layers based on
working and management and try to improve
their ranking. Those which are left behind can their size, activity, and perceived riskiness.
mark the areas in which they lag and take a NBFCs in the lowest layer shall be known
as NBFC - Base Layer (NBFC-BL). NBFCs in
strategic approach to march forward.
middle layer and upper layer shall be known as
Taking this as a passing phase the NBFCs must NBFC - Middle Layer (NBFC-ML) and NBFC -
get ready and anticipate the future market Upper Layer (NBFC-UL) respectively. The Top
based on the post-COVID-19 scenario and Layer is ideally expected to be empty and will
work towards grabbing the opportunities that be known as NBFC - Top Layer (NBFC-TL).
will be thrown open for them. The immaculate
planning and execution of future strategies Base Layer- The Base Layer shall comprise of
will be the best way forward for all NBFCs. We (a) non-deposit taking NBFCs below the asset

The Institute Of Cost Accountants Of India

55