The RBI has introduced norms on the Basel III capital framework, fund raising, exposure guidelines, and norms on classification and valuation of investment portfolios for All India Financial Institutions (AIFIs), which will come into effect from April 2024.

• India has five AIFIs regulated by the central bank, namely the Export-Import Bank of India (EXIM Bank), the National Bank for Agriculture and Rural Development (Nabard), the National Bank for Financing Infrastructure and Development (NaBFID), the National Housing Bank (NHB), and the Small Industries Development Bank of India (SIDBI)
• AIFIs will be required to maintain a minimum total capital of 9 per cent by April 2024, wherein minimum tier-I capital will need to be at 7 per cent and common equity tier-I (CET-1) capital at 5.5 per cent. For NHB, the implementation date will be July 2024, given that its accounting year is July–June.
• All financial subsidiaries, except those engaged in insurance and non-financial activities (both regulated and unregulated), will need to be fully consolidated for the purpose of capital adequacy, the RBI said, adding that this will ensure an assessment of capital adequacy at the group level, taking into account the risk profile of assets and liabilities of the subsidiaries.
• Further, AIFIs’ equity investment in a single entity cannot exceed 49 per cent of the equity of the investee.While AIFIs can hold this entire 49 per cent stake as a pledgee, if the acquisition is against AIFI’s claims, the stake will need to be brought below 10 per cent within three years.