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BusinessLine twenty years ago today: RBI unveils regulatory norms for NBFCs

January 3 | Updated on January 08, 2018 Published on January 02, 2018

Non-banking financial companies accepting public deposits will from now on be governed by a ceiling on deposits linked to credit rating and a maximum permissible interest rate of 16 per cent. NBFCs having a net owned fund of less than Rs. 25 lakhs will not be allowed to raise public deposits (PDs). Those accepting PDs must achieve a capital adequacy ratio of 10 per cent by March 1998 and 12 per cent by March 1999. The liquid asset requirement will be applicable to only PDs. The ratio of liquid assets will be uniform for all NBFCs accepting PDs at 12.5 per cent from April 1, and 15 per cent from April 1, 1999.

Directions to auditors

The RBI has issued directions to the statutory auditors of NBFCs requiring them to issue, in addition to the normal auditors’ report on the financial statements to the shareholders, a report to the board of directors of the NBFC containing a statement on certain matters of supervisory concern to the RBI. These directions are intended to provide supervision over NBFCs and ensure that they comply with the RBI directions. In the event any of the statements by the auditors are unfavourable or qualified or in the opinion of the auditor, the NBFC has not complied with the RBI directions, the auditors are obliged to directly bring these matters to the RBI’s attention.

ALFSC to petition RBI

The Association of Leasing and Financial Services Companies will be shortly making a representation to the Reserve Bank of India on the new regulatory framework for NBFCs announced on Friday. The committee members of the Association will meet on Saturday to take a view, on, the issue.

Published on January 02, 2018
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