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Once the registration process is through, preparation of memorandum and articles of association, code of conduct, membership structure etc would be completed within the next two or three months. The regulator would start functioning by February 2004

Kolkata , Nov. 14

A SELF-REGULATORY organisation, called the Finance Industry Development Council (FIDC), for overseeing the interests of the non- banking financial companies was announced on Friday at the 19th National Convention of the Federation of Indian Hire Purchase Associations (FIHPA), hosted by the Kolkata-based Hire Purchase and Lease Association.

The FIDC, once fully operational, will act as the voice of the NBFC sector from a single platform and represent the industry in dialogues with the Reserve Bank of India and the Government on the various issues plaguing the sector. The council will be headquartered in Mumbai, with full-fledged regional chapters in the major metros.

Making the announcement at the inaugural session of the Convention here , Mr Sunil Kanoria, President of FIHPA, said once the registration process was through, preparation of memorandum and articles of association, code of conduct, membership structure etc would be completed within the next two or three months. He said the FIDC should start functioning by February 2004. The first meeting of the core group, comprising heads of the three main industry associations, was held on September 27, 2003.

Briefing newspersons on the development, Mr Kanoria said the three main bodies - - FIHPA, Equipment and Leasing Association of India (ELAI) and the Association of Leasing & Financial Services Cos. (ALFS) - - would now work in unison to make FIDC successful. He said some 180 members of FIHPA had already given their consent for membership of FIDC.

Mr Kanoria said the Parliamentary Standing Committee on Finance, which had already submitted its report on the Financial Companies Regulation Bill, 2000, had duly acknowledged the role of NBFCs in the financial system.

According to Mr T.T. Srinivasaraghavan, MD, Sundaram Finance Ltd, the onus was now on the members of the various industry associations to come together and speak in one voice to take the NBFC sector forward. Admitting that it took a lot of time to finally arrive at convergence of views, he said the task was now cut out for FIDC.

Mr Mahesh Thakkar, Executive Director of ALFS, said a lot of stress would be laid on the self-regulatory aspect to make the body a true success. He said the majority membership would comprise the small outfits whose interests would have to be fully protected.

Earlier, addressing the inaugural session of the convention, Mr O.P. Agarwal, Chief General Manager, Department of Non-Banking Supervision, Reserve Bank of India, Mumbai, said the NBFC Bill was most likely to be tabled in the winter session of Parliament. He said the report of the Parliamentary Standing Committee on the Bill provisions had adequately addressed all the issues, and there was no divergence of views on any subject.

Elaborating on the convention theme of "Growth through innovation" for the NBFC sector, Mr Agarwal urged the sector to properly address the structural weaknesses which resulted in an asset-liability mismatch, and thereby led to higher NPA levels.

Citing the recent policy initiatives of RBI for the NBFC sector as a whole, he said proper corporate governance norms were being considered. The NBFCs were also being advised to be prepared for a move towards online filing of returns with the RBI.

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