RBI Update - Treatment of Right-of-Use (ROU) Asset for Regulatory Capital Purposes

RBI has issued notification regarding treatment of Right-of-Use (ROU) Asset for Regulatory Capital Purposes

The following has been stated

The Reserve Bank of India clarifies that for regulatory capital purpose entities are required to deduct Right-of-Use (ROU) Asset asset created under in terms of Ind AS 116-Leases from Owned Fund/ CET 1 capital/ Tier 1 capital as the case may beThe ROU asset shall be risk-weighted at 100 per cent, consistent with the risk weight applied historically to the owned tangible assets.This circular is applicable, with immediate effect, to all NBFCs (including HFCs) and Asset Reconstruction Companies implementing Companies (Indian Accounting Standards) Rules, 2015.

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