The Reserve Bank of India (RBI) has asked non-banking financial companies (NBFCs) to make additional disclosures under its framework for scale-based regulation of shadow lenders.

“These disclosures are in addition to and not in substitution of the disclosure requirements specified under other laws, regulations, or accounting and financial reporting standards,” the RBI said on April 19.

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“More comprehensive disclosures than the minimum required are encouraged, especially if such disclosures significantly aid in the understanding of the financial position and performance,” it added.

The disclosures are related to regulatory requirements, exposure to sectors like real estate, capital market, intragroup exposures and exposures related to unhedged foreign currency among others.

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These guidelines apply to all NBFCs and shall be effective for annual financial statements for the year ending March 31, 2023, and onwards, the central bank said.

In October 2021, RBI introduced a scale-based regulatory framework for NBFCs with effect from October 1, 2022. It outlines different aspects of the regulation of NBFCs, such as capital requirements, governance standards, and prudential regulations, among others. Under this framework, NBFCs are divided into four layers based on their size, activity, and perceived risk.

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The banking regulator aims to tighten its regulatory control on NBFCs, especially after the fallout of IL&FS and DHFL posed systemic risks.

Under the additional disclosures, NBFCs are required to disclose direct exposure to residential mortgages, commercial real estate including investments in Mortgage-Backed Securities (MBS) and other securitized exposures.

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They will have to disclose their direct investment in equity shares, convertible bonds, convertible debentures, and units of equity-oriented mutual funds the corpus of which is not exclusively invested in corporate debt.

The RBI has also asked the shadow lenders to disclose their bridge loans to companies against expected equity flows or issues and underwriting commitments taken up by such lenders towards bonds.

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NBFCs will also have to disclose their sectoral exposure to agriculture and allied activities, personal loans, and industry, among others. Intra-group and related party disclosures and exposure to unhedged foreign currency should be disclosed as well, the central bank said.

The RBI said a summary of information on complaints received by the NBFCs from customers and the offices of the ombudsman will also have to be disclosed.

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Corporate governance standards require NBFCs to make full disclosure as required by the capital market regulator in terms of the composition of the board, and general body meetings.

According to the central bank, NBFCs must disclose breaches of covenants of loans or debt securities issued as well as divergence in asset classification and provisioning.