The Core Investment Companies (NBFC CIC) are the ones that have their assets primarily as investments in shares for holding stake in group companies but not for trading purpose, and do not carry on any other financial activity. These kind of companies have a minimum ninety percent of their assets in the group concerns either in the form of equity, preference shares or convertibles bonds or loans. Further the module of equity holdings should not be less than sixty percent of their assets.
RBI has acknowledged that such CICs rightly rationalize a different treatment in the regulatory recommendation pertinent to Non-Banking Financial Companies that are non deposit taking and systemically significant. It is now determined by RBI that only those CICs having an asset size of Rs.100 crore and above would be treated as systemically significant core investment companies. Systemically significant core Investment Company means a Core Investment Company satisfying both the conditions:
The rules covering systemically significant CICs are as below:
A CIC which cling to the necessities regarding capital rations and leverage ratio as particularly above, may to the level necessary, be excluded from conformity with:-
Adjusted net worth means the cumulative, as appearing in the last audited balance sheet as at the end of the financial year, of Owned Funds as described in Non Banking Financial (Non Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 and forty-five percent of the amount reputed to credit of Revaluation Reserve arising from revaluation of investments in given investments, if any,
Fifty percent of the unrealized appreciation in the book value of quoted investments as at the date of the last audited balance sheet as at the end of the financial year (such appreciation being calculated, as the surplus of the cumulative market value of such investments over the book value of such investments); and
the amplify if any, in the equity share capital since the date of the last audited balance sheet.
The amount of lessening in the cumulative book value of given investments (such decrease being deliberated as the surplus of the book value of such investments over the cumulative market value of such investments ) and the cutback, if any, in the equity share capital since the date of the last audited balance sheet.
The average of the highs and lows of the given prices of the investments, on a documented stock exchange where the investment is most keenly traded, during the period of 26 weeks instantly preceding the end of the financial year at which date the last audited balance sheet is available.
Total liabilities as appearing on the liabilities side of the balance sheet not including 'paid-up capital' and 'reserves and surplus' but involving all forms of debt and obligations having the distinctiveness of debt whether created by issue of amalgamated instruments or otherwise and value of guarantees issued whether showing on the balance sheet or not.
Total assets as showing on the assets side of the balance sheet but not including :-
Non-Banking Financial Company (NBFC) is that kind of financial institution which offers various financial and non-financial services to business enterprises, individuals, entrepreneurs, etc. NBFC License must be taken from RBI
Peer-to-peer lending platforms offers a simple key to borrow money for short-term necessities. This shall include buying consumer electronics, medical emergency, business loan, home renovation, repay credit card dues, travel loan, or any other such requirements.
The procedure for taking over an NBFC is being laid down by the RBI. Takeover of an NBFC refers to purchase of one NBFC by another company. Only registered NBFC under the Act shall undertake to acquire the control of another NBFC.
NBFCs do not have those prosperities, which means that the NBFCs need alternate sources of the money supply, which are higher than the deposits taken by banks, where the interest rate offered is between 4%-6%.
Collaboration means coming together for a shared goal. India has more than 9000 active NBFC but barely 954 the NBFCs have book size more than 40 crores. Rest 8460 NBFCs are only able to meet the regulatory cap of the loan book of INR twenty Million.
RBI and other related regulators set rules and regulations, which keep on altering because of changing needs and circumstances. It is important for the NBFC management to know about what to do and how to do it, and there is a strong need to keep abreast of the times.
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