Liquidity Risk Management Framework for Non-Banking Financial Companies and Core Investment Companies

RBI/2019-20/88
DOR.NBFC (PD) CC. No.102/03.10.001/2019-20 November 04, 2019
All Non-Banking Financial Companies (NBFCs) including Core Investment Companies (CICs)
Madam/ Sir,
Liquidity Risk Management Framework for Non-Banking Financial Companies and Core
Investment Companies
Please refer to paragraph 108 and paragraph 94 of Master Direction - Non-Banking Financial
Company - Systemically Important Non-Deposit taking Company and Deposit taking Company
(Reserve Bank) Directions, 2016, and Master Direction - Non-Banking Financial Company –
Non-Systemically Important Non-Deposit taking Company (Reserve Bank) Directions, 2016,
both dated September 1, 2016, respectively.
Guidelines on Liquidity Risk Management Framework

2. In order to strengthen and raise the standard of the Asset Liability Management (ALM)
framework applicable to NBFCs, it has been decided to revise the extant guidelines on liquidity
risk management for NBFCs. All non-deposit taking NBFCs with asset size of Rs.100 crore
and above, systemically important Core Investment Companies and all deposit taking
NBFCs irrespective of their asset size, shall adhere to the set of liquidity risk management
guidelines given below. However, these guidelines will not apply to Type 1 NBFC-NDs1, NonOperating Financial Holding Companies and Standalone Primary Dealers. It will be the
responsibility of the Board of each NBFC to ensure that the guidelines are adhered to. The
internal controls required to be put in place by NBFCs as per these guidelines shall be subject
to supervisory review. Further, as a matter of prudence, all other NBFCs are also encouraged
to adopt these guidelines on liquidity risk management on voluntary basis.

3. While some of the current regulatory prescriptions applicable to NBFCs on ALM framework
have been recast below, a few additional features including disclosure standards have also
been introduced. The detailed guidelines are given in Annex A and the important changes are
as under:
i) Granular Maturity Buckets and Tolerance Limits
The 1-30 day time bucket in the Statement of Structural Liquidity is segregated into granular
buckets of 1-7 days, 8-14 days, and 15-30 days. The net cumulative negative mismatches in
the maturity buckets of 1-7 days, 8-14 days, and 15-30 days shall not exceed 10%, 10% and
20% of the cumulative cash outflows in the respective time buckets. NBFCs, however, are
expected to monitor their cumulative mismatches (running total) across all other time buckets