The Hindu Business Line : Non-deposit-taking NBFCs under Cos Act favoured

THE Associated Chambers of Commerce and Industry of India is of the view that non-deposit taking non-banking financial corporations (NBFCs) should not be governed by the Reserve Bank of India and should be regulated under the Companies Act, 1956 by the Department of Company Affairs.

This would ensure that the RBI would be able to optimise its resources to do better. The deposit-taking NBFCs could continue to be regulated by the apex bank, the chamber said.

The chamber President, Mr Mahendra K. Sanghi, said almost all over the world NBFCs are regulated under the respective Companies Regulation Acts and not by the central bank of the country.

In India, all the NBFCs are regulated by the apex bank under the RBI Act, 1934 (as Amended till 1997). In all, there are about 577 NBFCs all over the country (as on March 1, 2005) that are registered with the RBI and authorised to accept public deposits. In addition to this, there are about 14,000 NBFCs registered with the RBI that do not accept public deposits. The total deposit base of NBFCs is about Rs 4,000 crore (excluding residuary non-banking companies).

The non-deposit taking NBFCs are doing business out of their own funds, or out of institutional borrowings and as such they need not be subject to the stringent regulations of the RBI, said the chamber.

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