The guidelines emphasize the ‘Principles of Sound Liquidity Risk Management and Supervision’ published by Basel Committee on Banking Supervision. The framework expects the Boards of NBFCs to take an active role in the management of liquidity risk and deploy internal monitoring tools suitable to their business profile.
More importantly, the regulations have devised a simplified and tailored Liquidity Coverage Ratio (LCR) meant for large NBFCs. It would prepare large NBFCs to effectively meet cash outflows even under severe liquidity stress scenarios over a 30-day horizon.