Page 52 - Banking Finance March 2019

RBI CIRCULAR

wholly, in any of the activities covered under Foreign focus on specific sector/ asset classes. Different sets of
Contribution (Regulation) Act, 2010 (FCRA), it shall regulatory prescriptions were accordingly put in place.
obtain a certificate of registration under the said Act 3. On a review, it has been decided that in order to provide
and shall not seek permission under FEMA 22(R). NBFCs with greater operational flexibility,
3. Accordingly, the Form FNC has also been suitably harmonisation of different categories of NBFCs into
modified and the following phrase added under the fewer ones shall be carried out based on the principle
heading ‘Declaration’ in Part II clause (ii), at the end of regulation by activity rather than regulation by
of the existing sentence. entity. Accordingly, it has been decided to merge the
“We will not undertake either partly or fully, any three categories of NBFCs viz. Asset Finance Companies
activity that is covered under Foreign Contribution (AFC), Loan Companies (LCs) and Investment Companies
Regulation Act, 2010 (FCRA) and we understand that (ICs) into a new category called NBFC - Investment and
any misrepresentation made or false information Credit Company (NBFC-ICC).
furnished by us in this behalf would render the approval 4. Differential regulations relating to bank’s exposure to the
granted under the Foreign Exchange Management three categories of NBFCs viz., AFCs, LCs and ICs stand
(Establishment in India of a branch office or liaison office harmonised vide Bank’s circular DBR.BP.BC.No.25/
or a project office or any other place of business) 21.06.001/2018-19 dated, February 22, 2019. Further,
Regulations, 2016, automatically as void ab initio and a deposit taking NBFC-ICC shall invest in unquoted shares
such approval by the Reserve Bank shall stand of another company which is not a subsidiary company
withdrawn without any further notice”. or a company in the same group of the NBFC, an amount
4. All other provisions of the LO/BO/PO policy shall not exceeding twenty per cent of its owned fund.
remain unchanged. AD Category - I banks may bring 5. All related Master Directions (Non-Banking Financial
the contents of this circular to the notice of their Company – Non-Systemically Important Non-Deposit
constituents and customers. taking Company (Reserve Bank) Directions, 2016, Non-
5. The Master Direction No. 10 dated January 1, 2016 is Banking Financial Company - Systemically Important
being updated simultaneously to reflect the changes. Non-Deposit taking Company and Deposit taking
Company (Reserve Bank) Directions, 2016, Non-
6. The directions contained in this circular have been
Banking Financial Companies Acceptance of Public
issued under Section 10(4) and 11(2) of the Foreign
Deposits (Reserve Bank) Directions, 2016, Standalone
Exchange Management Act, 1999 (42 of 1999) and are Primary Dealers (Reserve Bank) Directions, 2016 and
without prejudice to permissions / approvals, if any, Residuary Non-Banking Companies (Reserve Bank)
required under any other law.
Directions, 2016) have been updated accordingly.
Yours faithfully
(R. K. Moolchandani) Yours faithfully
(Manoranjan Mishra)
Chief General Manager
Chief General Manager
Harmonisation of different categories of
Review of Instructions on Bulk Deposit
NBFCs
(Amended)
RBI/2018-19/130
February 22, 2019 RBI/2018-19/128
February 22, 2019
1. Please refer to paragraph 5 of the Statement on
Developmental and Regulatory Policies of the Sixth Bi- 1. In terms of extant instructions, banks have been given
monthly Monetary Policy Statement for 2018-19 dated discretion to offer differential rate of interest on the
February 07, 2019 on Harmonisation of NBFC Categories. bulk deposits as per their requirements and Asset-
Liability Management (ALM) projections.
2. Over a period of time, evolution of the NBFC sector has
resulted in several categories of NBFCs intended to 2. In this connection, as announced in the ‘Statement on

52 | 2019 | MARCH | BANKING FINANCE