Mumbai (Agencies): The Reserve Bank on Thursday directed deposit-taking NBFCs to raise their capital adequacy ratio (CAR), an indicator of risk management, to at least 15 per cent from March next year.

The move would help in boosting the ability of non-banking financial companies (NBFCs) to deal with any possible future financial risks.

Deposit-taking NBFCs are those, which are allowed to mobilise funds from the public apart from providing loans.

At present, the CAR of deposit taking NBFCs is minimum 12
per cent of its risk weighted assets.

While increasing the CAR to a minimum 15 per cent, the RBI said the step would enable it to "regulate the credit system to the advantage of the country".

CAR is the amount of capital that banks keep aside against various kinds of loans given.

At the same time, for systemically non-deposit-accepting NBFCs the CAR requirement has been raised to 15 per cent from March 2011.

Non-deposit-taking NBFCs are into lending business. They are, however, not allowed to accept funds from public.

RBI said the CAR has been hiked to regulate the credit system in the country, it has been decided to align the minimum capital ratio of all deposit-taking as well as systemically important non-deposit-taking NBFCs to 15 per cent.

With effect from March 31, 2012 all deposit-taking NBFCs shall maintain a minimum capital ratio consisting of Tier I and Tier II capital, "which shall not be less than 15 per cent" of its aggregate risk weighted assets on balance sheet and risk adjusted value of off-balance sheet items, RBI said.