Page 62 - BFSI CHRONICLE 10 th Issue (2nd Annual Issue ) 23062 COPY.indd

BFSI Chronicle, 2 Annual Issue, 10 Edition July 2022
nd
th
Transition of NBFCs to the Upper Layer - c) NBFCs which are close to meeting the
parameters and benchmarks that would
a) Once an NBFC is categorized as NBFC-
UL, it shall be subject to enhanced render PCA Framework
regulatory requirement, at least for a Conclusion
period of five years from its classification The global economic recovery has been losing
in the layer, even in case it does not meet momentum in the second half of 2021 in the
the parametric criteria in the subsequent face of resurfacing COVID-19 infections, the
year/s. In other words, it will be eligible new variant Omicron, supply disruptions and
to move out of the enhanced regulatory bottlenecks, elevated inflationary levels and
framework only if it does not meet shifts in monetary policy stances and actions
the criteria for classification for five across advanced economies and emerging
consecutive years. market economies. On the domestic front,
progress in vaccination has enabled the
b) NBFC-UL may however move out of the
enhanced regulatory framework before recovery to regain traction after the debilitating
second wave of the pandemic, notwithstanding
the period of five years if the movement
is on account of voluntary strategic signs of slowing pace more recently; the
move to readjust operations as per a corporate sector is gaining strength and bank
Board approved policy. This stipulation credit growth is improving. The capital to risk-
shall not apply if the scaling down of weighted assets ratio (CRAR) of scheduled
commercial banks (SCBs) rose to a new peak
operations is on account of adverse
situations specific to the NBFC and its of 16.6 per cent and their provisioning coverage
deteriorating financial conditions. ratio (PCR) stood at 68.1 per cent in September
2021.

The Institute Of Cost Accountants Of India

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