RBI further extends relaxation on MHP & MRR requirements till 30th June 2020

Aiming to curb the situation of the current liquidity crisis in the NBFCs sector of the country, the Reserve Bank of India (RBI), once again, in a gap of 6 months has extended the relaxation to NBFCs with regards to the Minimum Holding Period (MHP) requirements originating on NBFCs.

As a quick recollection of the dispensations provided to the NBFCs vide the circular DNBR (PD)CC.No.95/03.10.001/2018-19 dated November 29, 2018[1] on “Relaxation on the guidelines to NBFCs on securitisation transactions”, the following were the key takeaways of the relaxations as covered in our previous write-up (please click here[2]).

  Loans assigned between 31St December, 2019- 30th June, 2020 Loans assigned after 30th June, 2020
MHP requirements for loans with original maturity less than 5 years Loans upto 2 years maturity – 3 months

Loans between 2-5 years – 6 months

Loans upto 2 years maturity – 3 months

Loans between 2-5 years – 6 months

MHP requirements for loans with original maturity of more than 5 years Repayments of atleast 6 monthly instalments or two quarterly instalments (as applicable)

If revised MRR requirements fulfilled – 6 months

If revised MRR requirements fulfilled – 12 months

Repayments of atleast 12 monthly installments or four quarterly instalments (as applicable)
MRR requirements for loans with original maturity of less than 5 years Loans with original maturity upto 2 years – 5%

Loans with original maturity more than 2 years -10%

Loans with original maturity upto 2 years – 5%

Loans with original maturity more than 2 years -10%

Bullet repayment loans / receivables- 10%

MRR requirements for loans with original maturity of more than 5 years If benefit of MHP requirements availed – 20%

If benefit of MHP requirements not availed – 10%

Loans with original maturity more than 2 years – 10%

Bullet repayment loans / receivables- 10%

[1] https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11422&Mode=0

[2] http://vinodkothari.com/2018/11/rbi-temporarily-relaxes-the-guidelines-on-securitisation-for-nbfcs/

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