NBFCs On the basis of size –

NBFCs On the basis of size –

NBFCs – CORE INVESTMENT COMPANIESIn Indian financial system, Non-banking financial companies (NBFCs) are fastly emerging as a very important segment. They supplement the role of the banking sector in meeting the increasing financial needs of the Society. However, NBFCs do not include services which are related to agricultural activity, industrial activity, purchase, construction or sale of immovable property. NBFCs are different from Banks, despite of that, they are bound & regulated by Banking Industry rules & regulations.CATEGORIES OF NBFCs:NBFCs are categorized into various kinds:in terms of liabilities – Deposit and Non-Deposit accepting NBFCs, On the basis of size – Systemically important and non-systematically important NBFCs, by the kind of activities they conduct.

WHAT IS CORE INVESTMENT COMPANY (CIC) – NBFCs ?Core Investment Company (CIC) is a kind of NBFC which is in the business of acquisition of shares/securities and which satisfies the below stated conditions as on the date of the last audited balancesheet:-holds not less than 90% of its net assets in form of investment in the equity shares, preference shares, debentures, bonds, loans or debt in group companies;(b) its investments in the equity shares (including instruments which are convertible compulsarily into equity shares within a period not exceeding 10 years from the date of its issue) in the group companies constitutes not less than 60% of its net assets Here net assets would mean total assets excluding cash & bank balances; investment in the money-market mutual funds & other instruments; advance tax payments and deferred tax payment.does not trade in its investments in shares, securities, debentures, bonds, loans or debt in group companies except for the purpose of disinvestment or dilution through block sale;(d) does not carry on any other financial activity as mentioned in Section 45 I(c) & 45 I(f) of Reserve Bank of India Act, 1934 except:i) investment in money market instruments, including money market mutual funds, bank deposits, government securities, bonds or debentures issued by the group companies; ii) granting loans to the group companies; andiii) issuing guarantees on behalf of the group companies.Systemically Important Core Investment Company (CIC-ND-SI):Non- deposit taking NBFCs with an asset size of Rs. 100 crore or more as per the last audited balance sheet have been defined as systemically important NBFCs, (NBFCs-ND-SI). Pursuant to clause (h) of sub-para(1) of para(3) of Core Investment Companies (Reserve Bank) Directions, 2011, Systemically Important Core Investment Company (CIC-ND-SI) is defined as a CIC having total assets of not less than Rs.100 crore either individually or in aggregate along with other (CIC) in the Group & which raises or holds public funds.REGULATORY FRAMEWORK – REGISTRATION REQUIREMENT:Every CIC shall apply to RBI for grant of certificate of registration within a period of three months from the date of becoming a CIC-ND-SI.CAPITAL REQUIREMENT :Adjusted Net Worth of the CIC-ND-SI, at no point of time, shall be less than 30% of its aggregate risk weighted assets on the balance sheet & risk adjusted value of off-balance sheet items as on the date of the last audited balance sheet as at the end of financial year.EXEMPTIONSRBI may, if it considers it necessary, grant extension of time to comply with or exempt any CIC-ND-SI from all or any of the provisions of Core Investment Companies (Reserve Bank) Directions, 2011, either generally or for any specified period, subject to such conditions as RBI may impose.SUBMISSION OF ANNUAL STATUTORY AUDITORS CERTIFICATE:Every CIC-ND-SI is required to submit an annual certificate regarding compliance with the requirements of the above directions within a period of 1 month from the date of finalization of balance-sheet from its Statutory Auditors************************************************************************

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