The Reserve Bank of India on June 06, 2022, issued guidelines on differential provisioning to be held by NBFCs classified as NBFC-Upper Layer (NBFC-UL) towards different classes of standard assets.
Accordingly, it has been decided that NBFCs classified as NBFC-UL shall maintain provisions in respect of ‘standard’ assets at the following rates for the funded amount outstanding
| Category of Assets | Rate of Provision |
| Individual housing loans and loans to Small and Micro Enterprises (SMEs) | 0.25 per cent |
| Housing loans extended at teaser rates | 2.00 per cent, which will decrease to 0.40 per cent after 1 year from the date on which the rates are reset at higher rates (if the accounts remain ‘standard’) |
| Advances to Commercial Real Estate – Residential Housing (CRE – RH) Sector | 0.75 per cent |
| Advances to Commercial Real Estate (CRE) Sector (other than CRE-RH) | 1.00 per cent |
| Restructured advances | As stipulated in the applicable prudential norms for restructuring of advances |
| All other loans and advances not included above, including loans to Medium Enterprises | 0.40 per cent |
Current credit exposures arising on account of the permitted derivative transactions shall also attract provisioning requirements as applicable to the loan assets in the ‘standard’ category, of the concerned counterparties.
Since NBFCs with a net worth of Rs. 250 crore or above are required to comply with Indian Accounting Standards (Ind AS) for the preparation of their financial statements, they shall continue to hold impairment allowances as required under Ind AS.
It will come in effective from October 1, 2022.
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