Financial Daily from THE HINDU group of publications
Wednesday, Jan 02, 2002
Financial Daily from THE HINDU group of publications Wednesday, Jan 02, 2002 |
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NBFCs Money & Banking - NBFCs Fresh audit norms for NBFCs Our Bureau
MUMBAI, Jan. 1 NON-BANKING finance companies (NBFCs) with paid-up capital of less than Rs 5 crore or having asset size of Rs 50 crore will have to constitute audit committee as stipulated under the Companies Act. The RBI, which directed NBFCs to follow the stipulation, said this is being done to align RBI regulations with provisions under the Companies Act. These measures are a part of a process of rationalisation by the RBI of the NBFC regulations. The central bank has also decided to include loans against hypothecation of all types of automobiles registered with the Road Transport Authority and the Motor Vehicles Act, aircrafts registered with the Director-General of Civil Aviation and ships registered with the Director-General of Shipping along with other leasing and hire purchase assets for the purpose of classification of an NBFC as equipment leasing or hire purchase finance company. NBFCs have been advised to report to the Company Law Board whenever they default in repayment of matured deposits or payment of interest to small depositors within 60 days of default under Section 58AA of the Companies Act, which is also applicable to NBFCs. The RBI has directed companies whose application for certificate of registration have been rejected or cancelled, to continue to repay their deposits, if any, on due dates and dispose of their financial assets or convert into non-banking financial companies within three years from the date of rejection or cancellation. Companies have also been directed to frame investment policies, classify each investment into current and long term at the time of making the investment, make inter-class transfer at the lower of book value or market value without taking advantage of block valuation. NBFCs will also be required to maintain the prescribed minimum capital ratio not only on reporting dates but also on an ongoing basis.
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