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Our Bureau

Mumbai , Dec. 4

Non-banking finance companies (NBFCs) with a minimum net-owned fund of Rs 100 crore and a net profit for two years can now distribute mutual funds and issue co-branded credit cards (with commercial banks) with prior approval of RBI.

According to an RBI notification, NBFCs should not have more than three per cent net NPAs. The non-deposit-taking NBFCs should have a capital adequacy ratio of 10 per cent and deposit-taking NBFCs should have 12 per cent or 15 per cent, as applicable to the company.

The RBI had announced in its Mid-Term Review of Annual Policy Statement, 2006-07, that NBFCs can issue co-branded credit cards with banks without risk sharing apart from marketing and distributing mutual funds. .

In case of issuance of credit cards, "the role of the NBFC under the tie-up arrangement should be limited only to marketing and distribution of the co-branded credit cards. The co-branded credit card issuing bank would be subject to all the instructions or guidelines issued by the concerned regulatory authority," said the RBI.

The bank issuing co-branded credit card would be solely responsible for fulfilment of KYC requirements.

The credit card account should be maintained by the customer with the bank and all the payments by the card holders should be in the name of the bank. If any account is maintained by the user with the NBFC, it should not be debited for settlement of dues arising from the credit card.

More Stories on : NBFCs | Mutual Funds | Credit Cards & Debit Cards

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