Large non-banking finance companies (NBFCs) will have to maintain provisions for standard assets in sectors like housing, small and medium enterprises (SMEs) and real estate, the Reserve Bank of India (RBI) on Monday said.

Making regulatory norms tighter for the upper layer of NBFCs, the RBI said these will come into effect from 1 October 2022.

For individual housing loans and loans to SMEs, the RBI has set the rate of provision at 0.25%. Housing loans extended at teaser rates has been fixed at 2%. The latter will decrease to 0.4% after one year from the date on which the rates are raised.

In case of loans to the Commercial Real Estate – Residential Housing (CRE - RH) sector, the rate of provision is 0.75%. Other real estate loans would carry a higher provisioning of 1%.

The loans to medium-sized enterprises and advances not included in any of the categories would attract 0.40% provision.

Current credit exposures arising on account of the permitted derivative transactions shall attract provisioning requirements as applicable to the loan assets in the 'standard' category.

In October last year, the RBI had categorised four NBFCs based on their size, activity and perceived riskiness. The upper-layer NBFCs were specifically identified by the central bank for enhanced regulatory requirements. The top ten eligible NBFCs, in terms of asset size, shall always reside in the upper layer, irrespective of any other factor.

The other layers of NBFCs include base layer, middle layer and top layer.