{"id":86341,"date":"2019-11-07T15:51:25","date_gmt":"2019-11-07T10:21:25","guid":{"rendered":"http:\/\/factly.forumias.com\/?p=11444"},"modified":"2019-11-07T15:51:25","modified_gmt":"2019-11-07T10:21:25","slug":"asset-liability-managementalm-framework-for-nbfcs","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/asset-liability-managementalm-framework-for-nbfcs\/","title":{"rendered":"Asset Liability management(ALM) Framework for NBFC\u2019s"},"content":{"rendered":"\n<p><strong>News:<\/strong>The Reserve Bank of India(RBI) has introduced \u2018liquidity management framework\u2019 for Non-Banking Financial Companies (NBFCs).<br><\/p>\n\n\n\n<p><strong>Facts:<\/strong><br><\/p>\n\n\n\n<p><strong>Why this framework?<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>This framework is introduced due to liquidity crunch faced by some NBFCs after the collapse of the Infrastructure Leasing and Financial Services(IL&amp;FS) group.<\/li><\/ul>\n\n\n\n<p><strong>About the framework:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>The framework has introduced the liquid\u00adity coverage ratio(LCR) for Non-Banking Financial Companies (NBFCs).<\/li><li>It says that all non deposit taking NBFCs with an asset size of \u20b910,000 crore and above and all deposit taking NBFCs irrespective of their asset size have to maintain LCR at 50% starting from December 2020 which will be gradually increased to 100 per cent by December 2024.<\/li><li>For all non deposit taking NBFCs with asset size between \u20b95,000\u00ad-10,000 crore,the LCR requirement will start at 30 per cent in December 2020 and reach 100 per cent by December 2024.<\/li><li>However,these guidelines will not apply to Type 1 NBFC-NDs, non-operating financial holding companies and standalone primary dealers.<\/li><li>Type I &#8211; NBFC-ND entities are those which do not accept public funds and do not have customer interface and do not intend to engage in such activities.<\/li><\/ul>\n\n\n\n<p><strong>Additional information:<\/strong><br><\/p>\n\n\n\n<p><strong>About liquidity coverage ratio:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>LCR refers to the proportion of highly liquid assets held by companies to ensure their ongoing ability to meet short-term obligations.<\/li><li>It promotes resilience of banks to potential liquidity disruptions by ensuring that they have sufficient High Quality Liquid Asset(HQLA) to survive any acute liquidity stress scenario lasting for 30 days.<\/li><li>HQLAs mean liquid assets that can be readily sold or immediately converted into cash at little or no loss of value or used as collateral to obtain funds in a range of stress scenarios.<\/li><\/ul>\n\n\n\n<p><strong>About NBFCs:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>An NBFC is a company registered under the Companies Act,1956.It engages in the business of (a)loans and advances (b)acquisition of shares \/stocks\/ bonds\/ debentures\/securities issued by Government or local authority or other marketable securities of a like nature leasing and (c)hire-purchase,insurance business,chit business.<\/li><li>However,it does not include any institution whose principal business is that of&nbsp; (a)agriculture activity (b)industrial activity (c)purchase or sale of any goods (other than securities) and (d)providing any services and sale\/purchase\/construction of immovable property.<\/li><\/ul>\n","protected":false},"excerpt":{"rendered":"<p>News:The Reserve Bank of India(RBI) has introduced \u2018liquidity management framework\u2019 for Non-Banking Financial Companies (NBFCs). Facts: Why this framework? This framework is introduced due to liquidity crunch faced by some NBFCs after the collapse of the Infrastructure Leasing and Financial Services(IL&amp;FS) group. About the framework: The framework has introduced the liquid\u00adity coverage ratio(LCR) for Non-Banking&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/asset-liability-managementalm-framework-for-nbfcs\/\">Continue reading <span class=\"screen-reader-text\">Asset Liability management(ALM) Framework for NBFC\u2019s<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[3127],"tags":[3920,928],"class_list":["post-86341","post","type-post","status-publish","format-standard","hentry","category-economy","tag-asset-liability-framework","tag-nbfc","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/86341","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=86341"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/86341\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=86341"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=86341"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=86341"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}