RBI directs NBFCs to return full cash deposit within first 3 months in case of emergency

The Reserve Bank has directed non-banking financial companies – NBFCs to return 100 percent of deposit amount within the first three months, if the depositor seeks the withdrawal citing an emergency like medical expenses or natural calamity. In a statement, RBI said, no interest will be paid for such premature withdrawals.

In case a depositor wishes to withdraw for any other reason, the NBFCs can pay 50 percent of the deposit without paying any interest. It added that not more than 50 per cent of the principal sum or 5 lakh rupees, whichever is lower, may be prematurely paid. RBI has further asked NBFCs to intimate depositors about a maturity 14 days ahead as against the present regulations stipulating it at two months. These



changes will come into force from 1st January, 2025.

After a review to harmonise the rules for housing finance companies and NBFCs, RBI has further said, all deposit taking housing finance companies shall maintain liquid assets to the extent of 15 percent of the public deposits as against 13 percent right now. Additionally, HFCs shall ensure that full asset cover is available for public deposits accepted by them at all times. These companies have to get the ‘investment grade’ rating by credit rating agencies at least once a year.

RBI has added that restrictions on investments in unquoted shares applicable for NBFCs will also become applicable to HFCs.