The Reserve Bank of India (RBI) on Monday said all nonbanking financial companies (NBFCs) should provide 0.25% of their outstanding loan book, even as the loans are good, as provisions. This is over and above the standard provisions that NBFCs have to make for bad debts. “In the interests of counter cyclicality and so as to ensure that NBFCs create a financial buffer to protect them from the effect of economic downturns, it has been decided to introduce provisioning for standard assets also,“ RBI said in a notification on Monday.
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