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RBI modifies deposit norms for NBFCs

Special Correspondent

Cos. with NOF of Rs. 200 lakh to freeze their deposits

CHENNAI: The Reserve Bank of India has asked non-banking finance companies (NBFCs) with net-owned funds (NOF) of less than Rs. 200 lakh to freeze their deposits at current levels.

In a notification, the apex bank has also directed asset finance companies (AFCs), having a minimum investment grade credit rating and CRAR (capital-to-risk assets ratio) of 12 per cent, to bring down public deposits to a level that is 1.5 times their NOF. In the case of other NBFCs, the RBI wants them to bring their public deposits to a level equal to their NOF by March 31, 2009.

According to the notification, companies which are now eligible to accept public deposits up to a certain level but have not accepted deposits up to that limit, will now be permitted to accept public deposit up to the revised ceiling. It has also asked NBFCs which have reached a NOF level of Rs. 200 lakh to submit a certificate from statutory auditor on NOF.

Objective

The RBI has further stated that the NBFCs which are unable to achieve the prescribed ceiling within the stipulated time could approach it for appropriate action on a case-by-case basis.

These measures are primarily aimed at strengthening the financials of all deposit-taking NBFCs, the notification has said. The objective is to ensure that they raise the NOF to a minimum Rs. 200 lakh “in a gradual, non-disruptive and non-discriminatory manner,” the notification has said.

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