Master Direction - Miscellaneous Non-Banking Companies (Reserve Bank) Directions, 2016 - ಆರ್ಬಿಐ - Reserve Bank of India
Master Direction - Miscellaneous Non-Banking Companies (Reserve Bank) Directions, 2016
RBI/DNBR/2016-17/41 August 25, 2016 Master Direction - Miscellaneous Non-Banking Companies (Reserve Bank) Directions, 2016 The Reserve Bank of India (the Bank), 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, in exercise of the powers conferred by sections 45J, 45JA, 45K and 45L of the Reserve Bank of India Act, 1934 (Act 2 of 1934) (the RBI Act),and of all the powers enabling it in this behalf, and in supersession of the earlier Directions contained in Notification No.DNBC.39/DG (H)-77 dated 20th June 1977 as amended from time to time issues the following Miscellaneous Non-Banking Companies (Reserve Bank) Directions, 2016 (the Directions) applicable to every miscellaneous non-banking company hereinafter specified. 1. Short title and commencement of the directions (a) These directions shall be known as the “Miscellaneous Non-Banking Companies (Reserve Bank) Directions, 2016”. (b) These directions shall come into force with immediate effect. 2. Applicability of the Directions These directions shall apply to every financial institution which is a company and 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 carries on, in any place in India, any of the types of business referred to in sub-paragraphs (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- (a) giving or awarding periodically or otherwise to a specified number of subscribers as determined by lot, draw or in any other manner, prizes or gifts in cash or in kind, whether or not the recipient of the prize or gift is under a liability to make any further payment in respect of such scheme or arrangement; (b) refunding to the subscribers or such of them as have not won any prize or gift, the whole or part of the subscriptions, contributions or other monies collected, with or without any bonus, premium, interest or other advantage, howsoever called, on the termination of the scheme or arrangement, or, on or after the expiry of the period stipulated therein; (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). (5) This Direction consolidates the regulations as issued by Department of Non-Banking Regulation, Reserve Bank of India. However, any other Directions/guidelines issued by any other Department of the Bank, as applicable to a Miscellaneous Non-Banking Company shall be adhered to by it. 3. In these directions, unless the context otherwise requires, (a) "Act" means the Reserve Bank of India Act, 1934 (Act 2 of 1934); (b) "banking company" means a banking company as defined in section 5(c) of the Banking Regulation Act, 1949 (Act 10 of 1949); (c) "company" means a company as defined in section 45 I(aa) of the RBI Act but does not include a company which is being wound up under any law for the time being in force; (d) "deposit" shall have the same meaning as assigned to it in section 45 I(bb) of the RBI Act; (e) "depositor" means any person who has made a deposit with the company; (f) "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; (g) "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; (h) "miscellaneous non-banking company" means a company carrying on all or any of the types of business referred to in paragraph 2 of the directions. (2) Words or expressions used but not defined herein and defined in the RBI Act, shall have the same meaning as assigned to them in RBI Act. Any other words or expressions not defined herein or in the RBI Act shall have the same meaning as assigned to them in the Companies Act, 1956 (Act 1 of 1956) or Companies Act 2013(Act 18 of 2013) as the case may be. Chapter III 4. Nothing contained in Chapter IV, Chapter V and paragraph 19 of the 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 the directions; (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 (Act 10 of 1949) or a corresponding new bank as defined in section 2 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (Act 5 of 1970) or from a co-operative Bank as defined in section 5 (cci) of the Banking Regulation Act, 1949 (Act 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 (Act 7 of 1913) or the Industrial Finance Corporation of India established under the Industrial Finance Corporation Act, 1948 (Act 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 (Act 31 of 1956) or the Small Industries Development Bank of India established under the Small Industries Development Bank of India Act, 1989 (Act 39 of 1989) or a State Financial Corporation established under the State Financial Corporation Act, 1951 (Act 63 of 1951) or Unit Trust of India established under the Unit Trust of India Act, 1963 (Act 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 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 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) 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,- (a) it shall not be withdrawn without the consent in writing of the employee; and (b) it shall be repayable to the employee in accordance with the terms of his employment along with interest paid by bank/post office on the deposit account; (vi) 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; (vii) any amount received and held pursuant to an offer made in accordance with the provisions of the Companies Act, 2013, towards subscription to any securities, including share application money or advance towards allotment of securities pending allotment, to such extent and for such period as permissible under the Companies (Acceptance of Deposit) Rules, 2014 and as amended from time to time. Chapter IV 5. Acceptance of deposits by miscellaneous non-banking companies (MNBCs) On and from 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: (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 (ii) any other deposit, including non-convertible bonds or debentures. Provided that where a miscellaneous non-banking company is holding any deposit accepted from any person other than its shareholders, the same shall be repaid on maturity and shall not be eligible for renewal. 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 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 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 (Act 1 of 1956). 7. Furnishing of receipts to depositors (1) Every miscellaneous non-banking company shall furnish to every depositor 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 the 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. 8. Register of deposits (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, (b) date and amount of each deposit, (c) duration and the due date of each deposit, (d) date and amount of accrued interest or premium on each deposit, (e) date and amount of each repayment, whether of principal, interest or premium, (f) any other particulars relating to the deposit. (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 (Act 1 of 1956) at any place 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 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 (Act 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. (a) the total number of depositors of the company whose deposits have not been claimed by the depositors or paid by the company after the date on which the deposit became due for repayment or renewal as the case may be according to the contract with the depositor or the provisions of these directions, whichever may be applicable, and (b) the total amount due to the depositors and remaining unclaimed or unpaid beyond the dates referred to in clause (a) as aforesaid. (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. 10. Ceiling on the rate of interest and brokerage (1) No miscellaneous non- banking company shall:- (a) invite or accept or renew deposit on a rate of interest exceeding twelve and a half per cent per annum. Interest may be paid or compounded at rests which shall not be shorter than monthly rests: (b) pay to any broker for deposits collected by or through him, brokerage in excess of the rates specified below:-
11. Intimation of maturity of deposits to depositors 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. 12. Renewal of deposits before maturity Where any miscellaneous non-banking company permits an existing depositor “being a shareholder,” 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 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. 13. Renewal of overdue deposits 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: a) the total amount of overdue deposit or the part thereof is renewed from the date of its maturity till some future date in accordance with the other provisions of these directions; and b) the interest allowed shall be at the appropriate rate operative on the date of the maturity of such overdue deposit which shall be payable only on the amount of deposit so renewed. Chapter V 14. Minimum lock- in period and repayment in the event of death of the depositor 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 -shall 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. 15. Repayment of deposits by a miscellaneous non-banking company not being a problem miscellaneous non-banking company Subject to the provisions contained in paragraph 14, a miscellaneous non-banking company not being a problem miscellaneous non-banking company may, (a) with effect from October 05, 2004, permit premature repayment of a deposit at its sole discretion: Provided that in the case of a deposit accepted prior to the aforesaid date, such miscellaneous non-banking company shall, if so permitted by the terms and conditions of acceptance of such deposit, repay it prematurely at the request of the depositor, after the expiry of three months from the date of deposit; (b) grant a loan up to seventy-five percent of the amount of deposit to a depositor after the expiry of three months from the date of deposit at a rate of interest two percentage points above the interest rate payable on the deposit. 16. Repayment of deposits by a problem miscellaneous non-banking company Subject to the provisions contained in paragraph 14 above, in order to enable a depositor to meet expenses of an emergent nature, a problem miscellaneous non-banking company shall make premature prepayment of, or grant a loan against, a deposit in the following cases only, namely: (a) repay a tiny deposit in entirety or repay any other deposit up to an amount not exceeding ₹ 10,000/-; or (b) grant a loan against a tiny deposit or up to an amount not exceeding ₹ 10,000/- against any other deposit at a rate of interest two percentage points above the interest rate payable on the deposit. 17. Clubbing of deposits by a problem miscellaneous non-banking company 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 paragraph 14 above. 18. Rate of interest on premature repayment of deposits 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, 2016 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 ₹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. Chapter VI 19. Advertisement and statement in lieu of advertisement (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: (a) the actual rate of return by way of interest, premium, bonus or other advantage to the depositor; (b) the mode of payment to depositor; (c) maturity period of deposit; (d) the interest payable on a specified deposit; (e) the rate of interest which will be payable to the depositor in case the depositor withdraws the deposit prematurely, the terms and conditions subject to which a deposit will be renewed; (f) any other special features relating to the terms and conditions subject to which the deposits are accepted/renewed; and (g) that the deposits solicited by it are not insured (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 Department of Non-Banking Supervision of the 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 was required to be held in accordance with the provisions of the Companies Act, 1956 (Act 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. 20. 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". 21. Exemption The 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 Bank may impose. 22. Applicability of Know Your Customer (KYC) Direction, 2016 All miscellaneous non-banking companies having customer interface shall follow the Know Your Customer (KYC) Direction, 2016, issued by the Department of Banking Regulation and as amended from time to time. 23. Deposits from Non-Resident Indians No miscellaneous non-banking company shall invite or accept or renew repatriable deposits from Non-Resident Indians in terms of Notification No.FEMA.5/2000-RB dated May 3, 2000 under Non-Resident (External) Account Scheme at a rate exceeding the rate specified by the Bank for such deposits with scheduled commercial banks. Explanation - The period of above deposits shall be not less than one year and not more than three years. 24. Non-applicability of certain other directions Nothing contained in the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 2016 and Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016, shall apply to a financial institution of the type referred to in paragraph 2 of these Directions. Chapter - VII 25. The reporting requirements in respect of miscellaneous non-banking companies as prescribed by Department of Non-Banking Supervision shall be adhered to by the miscellaneous non-banking company. Chapter - VIII 26. For the purpose of giving effect to the provisions of the Directions, the Bank may, if it considers necessary, issue necessary clarifications in respect of any matter covered herein and the interpretation of any provision of the Directions given by the Bank shall be final and binding on all the parties concerned. Violation of these directions shall invite penal action under the provisions of RBI Act. Further, these provisions shall be in addition to, and not in derogation of the provisions of any other laws, rules, regulations or directions, for the time being in force. 27. It is hereby clarified that the supersession of Miscellaneous Non-Banking Companies (Reserve Bank) Directions, 1977 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. Chapter - IX 28. With the issue of the directions, the instructions / guidelines contained in the following circulars issued by the Bank stand repealed (list as provided below).All approvals / acknowledgements given under the above circulars shall be deemed as given under the directions. Notwithstanding such repeal, any action taken/purported to have been taken or initiated under the instructions/guidelines having repealed shall continue to be guided by the provisions of said instructions/guidelines.
(C. D. Srinivasan) First Schedule (Please see paragraph 19 of Chapter VI of the Directions) RESERVE BANK OF INDIA
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