Reserve Bank of India (Non-Banking Financial Companies – Concentration Risk Management) Second Amendment Directions, 2026

This notification (March 10, 2026) issued by the Reserve Bank of India amends the Non-Banking Financial Companies Concentration Risk Management Directions, 2025, effective immediately, to review the definition of Tier 1 capital reckoned for compliance with credit and investment concentration norms for NBFCs.

The amendment replaces the definitions of ‘Owned Fund’ and ‘Tier 1 capital’ under paragraphs 4(7) and 4(8) to align them with the definitions given in the RBI (Non-Banking Financial Companies – Prudential Norms on Capital Adequacy) Directions, 2025. For the purpose of concentration norms, NBFCs are required to obtain an external auditor’s certificate on completion of capital augmentation and submit the same to the Department of Supervision of RBI before reckoning additions to capital funds. Sub-paragraphs 14(3) and 14(4) have been inserted clarifying that the applicable Tier 1 capital for compliance with concentration norms shall be determined based on the NBFC’s latest available financial statements, whether audited or subject to limited review.

The amendment ensures consistency in the definition and application of Owned Fund and Tier 1 capital across the concentration risk and capital adequacy frameworks for NBFCs.