Mumbai: The Reserve Bank of India (RBI) issued guidelines for the country’s largest non-banking finance companies (NBFCs) to implement a risk-based internal audit framework, in line with banks. The framework requires an NBFC’s internal audit function to assess risks independently of its existing risk-management functions.
The requirement is credit positive because it adds another layer of risk monitoring and improves the companies’ resilience to unexpected shocks, Moody’s said.
The guidelines will apply to all deposit-taking NBFCs or NBFCs with assets of more than Rs 500 billion as of March 31, 2022. The framework’s application to the largest NBFCs reflects the RBI’s ongoing efforts to strengthen and harmonise regulatory norms between NBFCs and banks. The NBFC sector has been increasingly important to credit growth in India.
