The Reserve Bank of India (RBI) has come up with a draft circular for declaration of dividend by NBFCs, wherein it has proposed that NBFCs should have at least 15 per cent Capital to Risk-Weighted Assets Ratio (CRAR) for the last 3 years, including the accounting year for which it proposes to declare a dividend.
The RBI has sought comments on the draft circular from NBFCs, industry participants and other interested parties by December 24.
"Deposit-taking Non-Banking Financial Company (NBFC-D) and Systemically Important Non-Deposit taking Non-Banking Financial Company (NBFC-ND-SI) should have CRAR of at least 15 per cent for last 3 years, including the accounting year for which it proposes to declare a dividend," said the draft circular.
It has also suggested that NBFCs should have a leverage ratio of less than seven for the last three years, including the accounting year for which it proposes to declare a dividend.
Further, it has proposed that the Core Investment Company (CIC) should have Adjusted Net Worth (ANW) of at least 30 per cent of its aggregate risk-weighted assets on the balance sheet and risk-adjusted value of off-balance sheet items for last 3 years, including the accounting year for which it proposes to declare a dividend.
It has also said that the net NPA ratio should be less than 6 per cent in each of the last three years, including the accounting year for which it proposes to declare a dividend.
The circular said that the guidelines will be applicable for the dividend to be declared for the financial year beginning April 01, 2020 (FY 2020-21) onwards.