Notification as amended upto June 30, 2014 - “Miscellaneous Non-Banking Companies (Reserve Bank) Directions, 1977” - আরবিআই - Reserve Bank of India
Notification as amended upto June 30, 2014 - “Miscellaneous Non-Banking Companies (Reserve Bank) Directions, 1977”
RBI/2014-15/45 July 1, 2014 To All Miscellaneous Non-Banking Companies Dear Sirs, Notification as amended upto June 30, 2014 – “Miscellaneous Non-Banking Companies (Reserve Bank) Directions, 1977” As you are aware, in order to have all current instructions on the subject at one place, the Reserve Bank of India issues updated Circulars / notifications. The instructions contained in the Notification No.DNBC.39/DG (H)-77 dated 20th June 1977 updated as on June 30, 2014 is enclosed. The updated notification has also been placed on the RBI web-site (http://www.rbi.org.in). Yours faithfully, (K. K. Vohra)
RESERVE BANK OF INDIA Notification No.DNBC.39/DG(H)-77 dated 20th June 1977 The Reserve Bank of India having considered it necessary in the public interest and being satisfied that for the purpose of enabling the Bank to regulate the credit system to the advantage of the country, it is necessary to give the directions set out below, hereby, in exercise of the powers conferred by sections 45J, 45K and 45L of the Reserve Bank of India Act, 1934, (2 of 1934) and of all the powers enabling it in this behalf, and in supersession of the earlier Directions contained in Notification No.DNBC.21/DG(S)-73 dated the 23rd August 1973 as amended from time to time gives to every miscellaneous non-banking company the directions hereinafter specified. 1. Short title and commencement of the directions These directions shall be known as the Miscellaneous Non-Banking Companies (Reserve Bank) Directions, 1977. They shall come into force with effect from the 1st July 1977 and any reference in these directions to the date of commencement thereof shall be deemed to be a reference to that date. 1[These directions shall apply to every financial institution which is a company and which carries on, in any place in the State of Jammu and Kashmir, any of the following types of business and to every financial institution which is a company and which carries on, in any place in India, any of the types of business referred to in sub-paragraph (2) to (4) below:- (1) Collecting whether as a promoter, foreman, agent or in any other capacity monies in one lump sum or in instalments by way of contributions or subscriptions or by sale of units, certificates or other instruments or in any other manner or as membership fees or admission fees or service charges to or in respect of any savings, mutual benefit, thrift, or any other scheme or arrangement by whatever name called, and utilising the monies so collected or any part thereof or the income accruing from investment or other use of such monies for all or any of the following purposes-
(2) managing, conducting or supervising as a promoter, foreman or agent of any transaction or arrangement by which the company enters into an agreement with a specified number of subscribers that every one of them shall subscribe a certain sum in instalments over a definite period and that every one of such subscribers shall in his turn, as determined by lot or by auction or by tender or in such other manner as may be provided for in the agreement be entitled to the prize amount; Explanation For the purposes of this sub-paragraph, the expression "prize amount" shall mean the amount, by whatever name it be called, arrived at by deduction from out of the total amount subscribed at each instalment by all subscribers, (a) the commission charged by the company or service charges as a promoter or a foreman or an agent; and (b) any sum which a subscriber agrees to forego, from out of the total subscriptions of each instalment, in consideration of the balance being paid to him; (3) Conducting any other form of chit or kuri which is different from the type of business referred to in sub-paragraph (2) above; (4) undertaking or carrying on or engaging in or executing any other business similar to the business referred to in sub-paragraph (1) to (3).] (1) In these directions, unless the context otherwise requires, (a) "banking company" means a banking company as defined in section 5(c) of the Banking Regulation Act, 1949 (10 of 1949); (b) "company" means a company as defined in section 45 I(a) of the Reserve Bank of India Act, 1934 (2 of 1934) but does not include a company which is being wound up under any law for the time being in force; (c) "deposit" shall have the same meaning as assigned to it in section 45 I(bb) of the Reserve Bank of India Act, 1934 (2 of 1934)"; (d) "depositor" means any person who has made a deposit with the company; (e) "foreman" means a person who under the chit or kuri agreement or any other scheme or arrangement is responsible for the conduct of the chit or kuri or such scheme or arrangement; (f) "free reserves" shall include the balance in the share premium account, capital and debenture redemption reserves and any other reserve shown or published in the balance sheet of a company and created through an allocation of profits, not being (i) a reserve created for repayment of any future liability or for depreciation in assets or for bad debts; or (ii) a reserve created by revaluation of the assets of the company; (g) "miscellaneous non-banking company" means a company carrying on all or any of the types of business referred to in paragraph 2 of these directions; (h) words or expressions used but not defined herein and defined in the Reserve Bank of India Act, 1934 (2 of 1934) shall have the same meaning as assigned to them in that Act. Any other words or expressions not defined herein or in the Reserve Bank of India Act, 1934 (2 of 1934) shall have the same meaning as assigned to them in the Companies Act, 1956 (1 of 1956). 4. Non-applicability of the directions to certain types of deposits of money Nothing contained in paragraphs 5 to 2[9B] and 13 of these directions shall apply to the following types of deposits received by a miscellaneous non-banking company, namely:- i) Any money received or collected under a transaction or arrangement referred to in sub-paragraph (2) of paragraph 2; ii) any money received from the Central Government or a State Government or any money received from any other source and the repayment of which is guaranteed by the Central Government or a State Government or any money received from a local authority or a foreign Government or any other foreign citizens, authority or person; iii) any money received from a banking company or from the State Bank of India or from a banking institution notified by the Central Government under section 51 of the Banking Regulation Act, 1949 (10 of 1949) or a corresponding new bank as defined in section 2 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970) or from a co-operative Bank as defined in 3[Section 5 (cci) of the Banking Regulation Act, 1949 (10 of 1949)]; iv) any loan received from the Industrial Development Bank of India established under the Industrial Development Bank of India Act, 1964 (18 of 1964) or the Industrial Credit & Investment Corporation of India Ltd., established under the Indian Companies Act, 1913 (7 of 1913) or the Industrial Finance Corporation of India established under the Industrial Finance Corporation Act, 1948 (15 of 1948) or the Industrial Reconstruction Bank of India Ltd., or the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956) or 4[the Small Industries Development Bank of India established under the Small Industries Development Bank of India Act, 1989 (39 of 1989) or] a State Financial Corporation established under the State Financial Corporation Act, 1951 (63 of 1951) or Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963) or the General Insurance Corporation of India and its subsidiaries or the Tamil Nadu Industrial Investment Corporation Ltd., or the National Industrial Development Corporation of India Ltd., or the 5[SCICI Ltd.], or the Rehabilitation Industries Corporation of India Ltd., or any Electricity Board constituted under the Electricity (Supply) Act, 1948 or the State Trading Corporation of India Ltd. or the Rural Electrification Corporation Ltd., or the Minerals and Metals Trading Corporation of India Ltd., or the Agricultural Finance Corporation Ltd., or the State Industrial and Investment Corporation of Maharashtra Ltd., or the Gujarat Industrial and Investment Corporation Ltd. or 6[the Asian Development Bank, or International Finance Corporation, or] any other financial institution wholly owned by the Central Government or a State Government or any other financial institution that may be notified by the Reserve Bank in this behalf; v) Deleted7 vi) Deleted[7] 8[vii) any money received from an employee of the company by way of security deposit for due performance of his duties: Provided that the amount of such security deposit is deposited with a scheduled bank or a post office in the joint names of the employee and the company on the conditions, that, -
9[viii) any money raised by issue of debentures or bonds with predetermined terms of conversion without any option given, either to the issuer or the holder for conversion of the said debentures or bonds into equity share capital;] ix) any money received by way of subscription to any share or stock pending the allotment of such shares or stock or any money received by way of subscription to debentures or bonds of the type specified in clause (viii) of this paragraph pending the allotment of such debentures or bonds and any money received by way of calls in advance on shares in accordance with the company's articles of association so long as such money is not repayable to the shareholders under the articles of association of the company. 10[4A. Joint Deposit Where so desired, deposits may be accepted in joint names not exceeding three, with or without any of the clauses namely, "Either or Survivor/s", "Number one or Survivor/s", "Any one or Survivor/s".] PART II - ACCEPTANCE OF DEPOSITS 5. Acceptance of deposits by miscellaneous non-banking companies (MNBCs) On and from the 1st July 1977, no miscellaneous non- banking company shall:- (a) receive any deposit repayable on demand or on notice, or repayable after a period of less than six months and more than thirty six months from the date of receipt of such deposit or renew any deposit received by it, whether before or after the aforesaid date unless such deposit, or renewal, is repayable not earlier than six months and not later than thirty six months from the date of such renewal: Deleted11 Deleted12 (b) receive or renew :- (i) "any deposit from a shareholder, if the amount of such deposit already received and outstanding in the books of the company as on the date of acceptance or renewal of such deposits, exceeds fifteen per cent of its net owned funds"13 (ii) "any other deposit, including non-convertible bonds or debentures".14 16[Deleted] 17[ [Deleted] 18[Explanation Net owned fund means - (a) the aggregate of the paid up equity capital and free reserves as disclosed in the latest balance sheet of the company after deducting therefrom - (i) accumulated balance of loss; (ii) deferred revenue expenditure; and (iii) other intangible assets; and (b) further reduced by the amounts representing (1) investments of such company in shares of (i) its subsidiaries; (ii) companies in the same group; (iii) all other non-banking financial companies; and (2) the book value of debentures, bonds, outstanding loans and advances (including hire purchase and lease finance) made to, and deposits with (i) subsidiaries of such company; and (ii) companies in the same group to the extent such amount exceeds ten per cent of (a) above.] 6. Particulars to be specified in application form soliciting deposit On and from the 1st July 1977, no miscellaneous non-banking company shall accept, renew or convert any deposit except on a written application from the depositor in the form to be supplied by the company, which form shall contain all the particulars specified in the Non-Banking Financial Companies and Miscellaneous Non-Banking Companies (Advertisement) Rules, 1977, made under section 58A of the Companies Act, 1956 (1 of 1956). 7. Furnishing of receipts to depositors (1) Every miscellaneous non-banking company shall furnish to every depositor 19[or group of joint depositors] or his agent, unless it has done so already, a receipt for every amount which has been or which may be received by the company by way of deposit before or after the date of commencement of these Directions. (2) The said receipt shall be duly signed by an officer entitled to act for the company in this behalf and shall state the date of deposit, the name of the depositor, the amount in words and figures received by the company by way of deposit, the rate of interest payable thereon and the date on which the deposit is repayable. (1) Every miscellaneous non-banking company shall keep one or more registers in which shall be entered separately in the case of each depositor the following particulars, namely- (a) name and address of the depositor, (2) The register or registers aforesaid shall be kept at the registered office of the company and shall be preserved in good order for a period of not less than eight calendar years following the financial year in which the latest entry is made of the repayment or renewal of any deposit of which particulars are contained in the register: Provided that if the company keeps the books of account referred to in sub-section (1) of section 209 of the Companies Act, 1956 (1 of 1956) at any place other other than its registered office in accordance with the proviso to that sub-section, it shall be sufficient compliance with this sub-paragraph if the register aforesaid is kept at such other place, subject to the condition that the company delivers to the Reserve Bank a copy of the notice filed with the Registrar under the proviso to the said sub-section within seven days of such filing. 9. Information to be included in the Board's report (1) In every report of the Board of Directors laid before the company in general meeting under sub-section (1) of section 217 of the Companies Act, 1956 (1 of 1956) after the date of commencement of these directions, there shall be included in the case of miscellaneous non-banking company, the following particulars or information, viz.
(2) The said particulars or information shall be furnished with reference to the position as on the last date of the financial year to which the report relates and if the amounts remaining unclaimed or undisbursed as referred to in clause (b) of the preceding sub-paragraph exceed in the aggregate the sum of rupees five lakhs, there shall also be included in the report a statement on the steps taken or proposed to be taken by the Board of Directors for the repayment of the amounts due to the depositors and remaining unclaimed or undisbursed. 20[Ceiling on the rate of interest and brokerage 9A 21[(1)] On and from 22[April 24, 2007], no miscellaneous non- banking company shall :- 24[Deleted] (i) where a deposit is for : one percent of such deposit (ii) where a deposit is for : one and a quarter per cent (not per annum) (iii) where a deposit is for : one and a half per cent (not per annum) Intimation of maturity of deposits to depositors 27[9AA. It shall be the obligation of the miscellaneous non-banking company to intimate the details of maturity of the deposits to the depositors at least two months before the date of maturity of the deposit.] Renewal of deposits before maturity 28[ 29[9AB.] Where any miscellaneous non-banking company permits an existing depositor “being a shareholder, 30”to renew his deposit before maturity for availing the benefit of higher rate of interest, such company shall pay the depositor the increase in the rate of interest provided (i) the deposit is renewed in accordance with the other provisions of these directions and for a period longer than the remaining period of the original contract; and (ii) the interest on the expired period of the deposit is reduced by one percentage point from 31[the rate which the company would have ordinarily paid , had the deposit been accepted for the period for which such deposit has run]and/or paid earlier and recovered/adjusted.] Renewal of overdue deposits 32[25[9AC] A miscellaneous non-banking company may, at its discretion, allow interest on an overdue deposit or a portion of the said overdue deposit from the date of maturity of the deposit provided that :
General Provisions regarding repayment of deposits 33[Minimum lock- in period and Repayment in the event of death of the depositor 9B. (i) No miscellaneous non-banking company shall grant any loan against deposits or make premature repayment of deposit within a period of three months (lock-in period) from the date of its acceptance: Provided that in the event of death of a depositor, a miscellaneous non-banking company may repay the deposit prematurely, even within the lock – in period, to the surviving depositor/s in the case of joint holding with survivor clause, or to the nominee or the legal heir/s of the deceased depositor, on the request of the surviving depositor/s/nominee/legal heir, and only against submission of proof of death, to the satisfaction of the company. Repayment of [Deleted34] deposits by a miscellaneous non-banking company not being a problem miscellaneous non-banking company (ii) Subject to the provisions contained in sub-paragraph (i), a miscellaneous non-banking company not being a problem miscellaneous non-banking company may,
Repayment of Deleted35 [] deposits by a problem miscellaneous non-banking company (iii) Subject to the provisions contained in sub-paragraph (i), in order to enable a depositor to meet expenses of an emergent nature, a problem miscellaneous non-banking company may make premature prepayment of, or grant a loan against, a deposit in the following cases only, namely:
36[Clubbing of deposits by a problem miscellaneous non-banking company (iv) All deposit accounts standing to the credit of sole/first named depositor in the same capacity shall be clubbed and treated as one deposit account for the purpose of premature repayment or grant of loan by a problem miscellaneous non-banking company; Provided that this clause shall not apply to premature repayment in the event of death of depositor as provided in sub-paragraph (i).] Rate of interest on premature repayment of deposits (v) Where a miscellaneous non-banking company, whether at its sole discretion or at the request of the depositor, as the case may be, repays a deposit after three months from the date of its acceptance, but before its maturity (including premature repayment in the case of death of the depositor), it shall pay interest at the following rates:
Explanation: For the purpose of this paragraph, (a) `problem miscellaneous non-banking company’ means a miscellaneous non-banking company which - (i) has refused or failed to meet within five working days any lawful demand for repayment of the matured deposits ; or (ii) intimates the CLB under section 58AA of the Companies Act, 1956, about its default to a small depositor in repayment of any deposit or part thereof or any interest thereupon; or (iii) approaches the Bank for withdrawal of the liquid asset securities to meet its deposit obligations; or (iv) approaches the Bank for any relief or relaxation or exemption from the provisions of Miscellaneous Non-Banking Company (Reserve Bank) Directions, 1977 for avoiding default in meeting deposit or other obligations; or (v) has been identified by the Bank to be a problem miscellaneous non-banking company either suomoto or based on the complaints from the depositors about non-repayment of deposits or on complaints from the company’s lenders about non-payment of dues. (b) ‘tiny deposit’ means the aggregate amount of deposits not exceeding Rs. 10,000/- standing in the name of the sole or the first named depositor in the same capacity in all the branches of the miscellaneous non-banking company.] Copies of balance sheet and accounts together with the Directors' report to be furnished to the Reserve Bank 10. Every miscellaneous non-banking company shall deliver to the Reserve Bank unless it has done so already, an audited balance sheet as on the last date of each financial year and an audited profit and loss account in respect of that year as passed by the company in general meeting together with a copy of the report of the Board of Directors laid before the company in such meeting in terms of section 217(1) of the Companies Act, 1956 (1 of 1956) within fifteen days of such meeting. 37Returns to be submitted to the Reserve Bank 11. (1) Without prejudice to the provisions of paragraph 10, every miscellaneous non-banking company 38[holding or accepting deposits] shall submit to the Reserve Bank a return furnishing the information specified in the First Schedule hereto, with reference to its position as on the dates specified in the said Schedule. (2) (i) Every miscellaneous non-banking company shall, not later than one month from the coming into force of these directions or from the commencement of business, whichever is later, deliver to the Reserve Bank, a written statement containing a list of:-
(ii) any change in the list referred to in clause (i) of this sub-paragraph shall be intimated to the Reserve Bank within one month from the occurrence of such change. Balance sheet, returns etc. to be submitted to the39 [Department of Supervision] 12. Any balance sheet, returns or information required to be submitted or furnished to the Reserve Bank in pursuance of these directions shall be submitted or furnished to the Regional Office of the 40[Department of Supervision] of the Reserve Bank within whose jurisdiction the registered office of the company is situated, as specified in the Second Schedule hereto. 41[Advertisement and statement in lieu of advertisement 13.(1) Every miscellaneous non-banking company shall comply with the provisions of the Non-Banking Financial Companies and Miscellaneous Non-Banking Companies (Advertisement) Rules, 1977 and shall also specify in every advertisement to be issued thereunder, the following :
(2) Where a company intends to accept deposits without inviting or allowing or causing any other person to invite such deposits, it shall before accepting deposits, deliver to the Regional Office of the 43[Department of Supervision] of the Reserve Bank, within whose jurisdiction its registered office is situated, for registration, a statement in lieu of advertisement containing all the particulars required to be included in the advertisement pursuant to the Non-Banking Financial Companies and Miscellaneous Non-Banking Companies (Advertisement) Rules, 1977 as also the particulars stated in sub-paragraph (1) hereinabove, duly signed in the manner provided in the aforesaid Rules. (3) A statement delivered under sub-paragraph (2) shall be valid till the expiry of six months from the date of closure of the financial year in which it is so delivered or until the date on which the balance sheet is laid before the company in general meeting or where the annual general meeting for any year has not been held, the latest day on which that meeting should have been held in accordance with the provisions of the Companies Act 1956 (1 of 1956), whichever is earlier, and a fresh statement shall be delivered in each succeeding financial year before accepting deposits in that financial year. The Reserve Bank may, if it considers it necessary for avoiding any hardship or for any other just and sufficient reason, grant extension of time to comply with or exempt any company or class of companies, from all or any of the provisions of these directions either generally or for any specified period subject to such conditions as the Reserve Bank may impose. 15. Non-applicability of certain other directions Nothing contained in the Non-Banking Financial Companies (Reserve Bank) Directions, 1977 shall apply to a financial institution of the type referred to in paragraph 2 of these Directions. 16. Saving of action taken or that may be taken for contravention of the Miscellaneous Non-Banking Companies (Reserve Bank) Directions, 1973 It is hereby clarified that the supersession of Miscellaneous Non-Banking Companies (Reserve Bank) Directions, 1973 as amended from time to time, shall not in any way affect (i) any right, obligation or liability acquired, accrued or incurred thereunder; (ii) any penalty, forfeiture, or punishment incurred in respect of any contravention committed thereunder; (iii) any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid, and any such investigation, legal proceeding or remedy may be instituted, continued, or enforced and any such penalty, forfeiture or punishment may be imposed as if those directions had not been superseded. (R.K. HAZARI) Annex
1 Substituted, vide Notification No.DNBC 41/ED(T)-79 dated May 9, 1979 2 Substituted, vide Notification No.44/ED(B)-81 dated April 15, 1981 3 Substituted, vide Notification No.DFC (COC) 74 ED(S)-94 dated April 19, 1994 4 Inserted vide Notification No.DFC(COC) 65 DG(T)/91-92 dated June 17, 1992 5 Substituted, vide Notification No.DFC(COC) 71ED (S)/93 dated May 12, 1993 6 Inserted, vide Notification No.DFC(COC)87 ED(JRP)/96 dated July 24, 1996 7 Omitted, vide Notification No.DFC(COC) 67 ED(S)-93 dated April 10, 1993 8 Substituted vide Notification No.DFC(COC) 62 DG(J)-91 dated September 19, 1991 9 Substituted, vide Notification No.DFC(COC) 87 ED(JRP)-96 dated July 24, 1996 10 Inserted, vide Notification No.DFC(COC) 65 DG(T)-92 dated June 17, 1992 11 Deleted videNotification No.DNBS.207/CGM (ANR)-2009 dated August 28, 2009 12 Deleted videNotification No.DNBS.207/CGM (ANR)-2009 dated August 28, 2009 13 Substituted vide Notification No.DNBS.207/CGM (ANR)-2009 dated August 28, 2009 14 Substituted vide Notification No.DNBS.207/CGM (ANR)-2009 dated August 28, 2009 15 Inserted vide Notification No.DNBS.207/CGM (ANR)-2009 dated August 28, 2009 16 Deleted videNotification No.DNBS.207/CGM (ANR)-2009 dated August 28, 2009 17 Deleted videNotification No.DNBS.207/CGM (ANR)-2009 dated August 28, 2009 18 Substituted, vide Notification No.DFC(COC) 104-ED(JRP)/97 dated March 31, 1997 19 Inserted, vide Notification No.DFC(COC) 65 DG(T)-92 dated June 17, 1992 20 Inserted, vide Notification No.DNBC.43 ED(S)-81 dated March 30, 1981 21 Paragraph 9A renumbered as 9A(1) vide Notification No. DNBS 175/CGM(OPA)-2003 dated September 17, 2003 22 Substituted, vide Notification No.DNBS 196/CGM(PK)-2007 dated April 24, 2007 23 Substituted, vide Notification No.DNBS 196/CGM(PK)-2007 dated April 24, 2007 24 Proviso deleted, vide Notification No.DNBS.207/CGM(ANR)-2009 dated August 17, 2009 25 Inserted, vide Notification No.DNBC 46/ED(B)/87 dated February 24, 1982 26 Deleted videNotification No.DNBS.207/CGM (ANR)-2009 dated August 28, 2009 27 Inserted, vide Notification No.181 dated October 5, 2004 28 Inserted, vide Notification No.DFC (COC) 62/ DG(J) dated September 19, 1991 29 Renumbered, vide Notification No.181 dated October 5, 2004 30 Inserted vide Notification No.DNBS.207/CGM (ANR)-2009 dated August 28, 2009 31 Substituted, vide Notification No.94.ED(JRP)/96 dated January 1, 1997 32 Inserted, vide Notification No.79 DG(T)/94 dated 31-12-1994 , 33 Substituted, vide Notification No.181 dated October 5, 2004 34 Deleted videNotification No.DNBS.207/CGM (ANR)-2009 dated August 28, 2009 35 Deleted videNotification No.DNBS.207/CGM (ANR)-2009 dated August 28, 2009 36 Substituted by Notification No.DNBS184/CGM(PK)-2005 dated December 9, 2005 37 MNBCs are prohibited from accepting deposits from public except from the shareholders in terms of DNBS (PD) CC.No. 159/03.03.01/2009-10dated August 28, 2009 38 Inserted vide Notification No.DNBS.185/CGM(PK)-2005 dated December 27, 2005 39 Substituted vide Notification No.DFC (COC) 87 ED(JRP)/96 dated July 24, 1996 40 Substituted vide Notification No.DFC (COC) 87 ED(JRP)/96 dated July 24, 1996 41 Substituted vide Notification No.DFC (COC) 62 DG(J)-91 dated September 19, 1991 42 Inserted vide Notification No.DNBS 162/CGM(CSM)-2002 dated October 1, 2002 43 Substituted vide Notification No.DFC (COC) 94 ED(JRP)/96 dated January 1, 1997 |