What changed
The implementation date for asset classification and provisioning norms for NBFC-MFIs has been pushed back by one year to April 1, 2013. This deferral was granted after considering representations from the MFI sector about operational challenges. All other regulatory requirements from the December 2011 circular continue to apply without change.
What it means for you
NBFC-MFIs get a one-year breather to align their asset quality and provisioning practices, easing immediate compliance pressure. Banks and lenders with exposure to NBFC-MFIs should note that the sector's financial discipline timeline is extended, potentially affecting risk assessments. The deferral signals RBI's willingness to accommodate sector-specific stress while maintaining other regulatory expectations.
What you must do
- Update internal compliance calendars to reflect the new April 1, 2013 deadline for NBFC-MFI provisioning norms.
- Ensure NBFC-MFI borrowers still comply with all other regulations from the December 2, 2011 circular.
- Review loan agreements and risk models to account for the delayed provisioning requirements.
- Monitor NBFC-MFI financial health closely during the extended transition period.
Who it affects
All NBFC-MFIs (excluding RNBCs), Banks and lenders with exposure to NBFC-MFIs, Regulatory compliance teams at NBFCs
What specific norms have been deferred?
The asset classification and provisioning norms for NBFC-MFIs, originally set to apply from April 1, 2012, have been deferred to April 1, 2013.
Are any other regulations from the December 2011 circular also deferred?
No, only the asset classification and provisioning norms have been deferred. All other regulations from the December 2, 2011 circular remain in effect.
Why did RBI grant this extension?
RBI considered difficulties faced by the MFI sector and representations received from them, leading to the decision to defer implementation.