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Indian Currency

F) COINS

9. From where can one get commemorative coins? +

For commemorative coins, you may refer to the website of SPMCIL at http://www.spmcil.com or contact SPMCIL.

FAQs on Non-Banking Financial Companies

Depositor Awareness

55. What should the depositors ensure while depositing their money with NBFCs? +

A. The NBFC has been in existence for at least two years. (New NBFCs are not permitted to mobilise public deposits during first two years of existence) The NBFC has a minimum credit rating of A- (CRISIL AND ICRA),BBB(CARE), BBB- (DCR India) if it is an Equipment Leasing/Hire Purchase Company and a minimum rating of A if it is a Loan/Investment Company. The NBFC does not have overdue deposits, except unclaimed deposits, while soliciting fresh deposits. The NBFC is a profit making company. The NBFC has declared that it has complied with the RBI Directions.

All you wanted to know about NBFCs

E. Depositor Protection Issues

55. We hear that in a number of cases Official Liquidators have been appointed on the defaulting NBFCs. What is the procedure adopted by the Official Liquidator? +

An Official Liquidator is appointed by the court after giving the company reasonable opportunity of being heard in a winding up petition. The liquidator performs the duties of winding up of the company and such duties in reference thereto as the court may impose. Where the court has appointed an official liquidator or provisional liquidator, he becomes custodian of the property of the company and runs day-to-day affairs of the company. He has to draw up a statement of affairs of the company in prescribed form containing particulars of assets of the company, its debts and liabilities, names/residences/occupations of its creditors, the debts due to the company and such other information as may be prescribed. The scheme is drawn up by the liquidator and same is put up to the court for approval. The liquidator realizes the assets of the company and arranges to repay the creditors according to the scheme approved by the court. The liquidator generally inserts advertisement in the newspaper inviting claims from depositors/investors in compliance with court orders. Therefore, the investors/depositors should file the claims within due time as per such notices of the liquidator. The Reserve Bank also provides assistance to the depositors in furnishing addresses of the official liquidator.

Indian Currency

F) COINS

10. Where can one complaint against non-acceptance of coins or exchange of notes and coins by Banks? +

In case of grievance against a specific bank, a complaint may be lodged with the bank branch concerned. If not satisfied with their reply, a complaint may be lodged with Nodal Officers/Principal Nodal Officers at Controlling Office/Head Office of the bank branch, appointed under the Banking Ombudsman Scheme, 2006, for redressal of complaints. If the complaint is not redressed within one month, a complaint can be made to Banking Ombudsman, under the Banking Ombudsman Scheme, 2006. Non-acceptance, without sufficient cause, of coins tendered and charging of commission in respect thereof is a valid ground for lodging complaints against a bank under the Banking Ombudsman Scheme 2006.The details of the Banking Ombudsman Scheme are available on RBI's website www.rbi.org.in. The name and contact details of the Nodal Officers of the banks are available in their respective official website.

For the complaints not covered under Banking Ombudsman Scheme, 2006, the complainants may approach to Consumer Education and Protection Cell, Reserve Bank of India (at cms.rbi.org.in) of respective region with their grievance about deficiency in customer service by RBI regulated entities.

FAQs on Non-Banking Financial Companies

Depositor Awareness

56. Where will a depositor find the above information? +

A This information is required to be printed in the Application Form issued by the company soliciting deposits.

All you wanted to know about NBFCs

E. Depositor Protection Issues

56. The Consumer Court plays useful role in attending to depositors problems. Can one approach Consumer Forum, Civil Court, CLB simultaneously? +

Yes, a depositor can approach any or all of the redressal authorities i.e consumer forum, court or CLB.

FAQs on Non-Banking Financial Companies

Depositor Awareness

57. Are there any other precautions that depositors should take? +

A Please note that: The NBFCs are allowed to accept public deposits in any form only for periods ranging between 12 months and 60 months. NBFCs cannot offer interest rates higher than the ceiling rate prescribed by RBI from time to time. The present ceiling is 16 per cent per annum. The interest may be paid or compounded at rests not shorter than monthly rests. NBFCs cannot offer gifts/incentives or any other additional benefit to the depositors.

All you wanted to know about NBFCs

E. Depositor Protection Issues

57. Is there an Ombudsman for hearing complaints against NBFCs or Does RBI have any grievance redressal mechanism in place for NBFCs? +

No, there is no Ombudsman for hearing complaints against NBFCs. However, in respect of credit card operations of an NBFC, which is a subsidiary of a bank, if a complainant does not get satisfactory response from the NBFC within a maximum period of thirty (30) days from the date of lodging the complaint, the customer will have the option to approach the Office of the concerned Banking Ombudsman for redressal of his grievance/s.If complaints or grievances against the NBFCs are submitted to the nearest office of the Reserve Bank of India, the same are taken up with the NBFC concerned to facilitate resolution of the grievance/complaint. Further, all NBFCs have in place a Grievance Redressal Officer, whose name and contact details have to be mandatorily displayed in the premises of the NBFCs. The grievance can be taken up with the Grievance Redressal Officer. In case the complainant is not satisfied with the settlement of the complaint by the Grievance Redressal Officer of the NBFC, he/she may approach the nearest office of the Reserve Bank of India with the complaint. The details of the Office of the Reserve Bank has also to be mandatorily displayed in the premises of the NBFC.

FAQs on Non-Banking Financial Companies

Depositor Awareness

58. What view could be taken when an NBFC offers much higher interest rate? +

A It should be noted that higher the interest, the higher is the risk. Particularly, the NBFCs offering interest or incentives (which are not permitted under the regulations) should be viewed with caution.

All you wanted to know about NBFCs

E. Depositor Protection Issues

58. Companies registered with MCA but not registered with RBI as NBFCs also sometimes default in repayment of deposit/ amounts invested with them? What is the recourse available to the investors in such an event? Does RBI have any role to play in such cases? +

Companies registered with MCA but not required to be registered with RBI as NBFC are not under the regulatory domain of RBI. Whenever RBI receives any such complaints about the companies registered with MCA but not registered with RBI as NBFCs, it forwards the complaints to the Registrar of Companies (ROC) of the respective state for any action. The complainants are advised that the complaints relating to irregularities of such companies should be promptly lodged with ROC concerned for initiating corrective action. However, in case it comes to the knowledge of RBI those companies were required to be registered with the RBI, but have not done so and have accepted deposits as defined under RBI Act, such action as is deemed necessary under the provisions of the RBI Act will be taken.

FAQs on Non-Banking Financial Companies

Depositor Awareness

59. What else should a depositor bear in mind while depositing money with NBFCs? +

A While making deposits with an NBFC the following aspects should also be borne in mind. Note that all public deposits are unsecured. Insist on a proper deposit receipt which should, besides the name of the depositor/s state the date of deposit, the amount in words and figures, rate of interest payable and the date of maturity. Amounts taken under any other nomenclature may not be treated as public deposits and may not be governed by RBI regulations.

All you wanted to know about NBFCs

E. Depositor Protection Issues

59. The NBFCs have been made liable to pay interest on the overdue matured deposits if the company has not been able to repay the matured public deposits on receipt of a claim from the depositor. Please elaborate the provisions. +

As per Reserve Bank’s Directions, overdue interest is payable to the depositors in case the company has delayed the repayment of matured deposits, and such interest is payable from the date of receipt of such claim by the company or the date of maturity of the deposit whichever is later, till the date of actual payment. If the depositor has lodged his claim after the date of maturity, the company would be liable to pay interest for the period from the date of claim till the date of repayment. For the period between the date of maturity and the date of claim it is the discretion of the company to pay interest. In cases where NBFCs are required to freeze the term deposits of customer based on the orders of the enforcement authorities or the deposit receipts are seized by the enforcement authorities, they shall follow the procedure as given below:

request letter may be obtained from the customer on maturity. While obtaining the request letter from the depositor for renewal, NBFCs should also advise him to indicate the term for which the deposit is to be renewed. In case the depositor does not exercise his option of choosing the term for renewal, NBFCs may renew the same for a term equal to the original term.
No new receipt is required to be issued. However, suitable note may be made regarding renewal in the deposit ledger.
Renewal of deposit may be advised by registered letter / speed post / courier service to the concerned Government department under advice to the depositor. In the advice to the depositor, the rate of interest at which the deposit is renewed should also be mentioned.
If overdue period does not exceed 14 days on the date of receipt of the request letter, renewal may be done from the date of maturity. If it exceeds 14 days, NBFCs may pay interest for the overdue period as per the policy adopted by them, and keep it in a separate interest free sub-account which should be released when the original fixed deposit is released.

However the final repayment of the principal and the interest so accrued should be done only after the clearance regarding the same is obtained by the NBFCs from the respective Government agencies.

FAQs on Non-Banking Financial Companies

RNBCs

60. Why regulations have not been framed for another class of NBFCs viz. RNBCs ? +

A. The deposit acceptance activities of the class of NBFCs, popularly known as RNBCs, are governed by the provisions of Residuary Non- Banking Companies (Reserve Bank) Directions, 1987. That the functioning of these companies (which are very few in number) is entirely different from those of the NBFCs in terms of method of mobilisation of deposits and requirement of deployment of depositors funds. These companies are required to invest not less than 80 per cent of their aggregate deposit liabilities according to the prescribed investment pattern. Only 20 per cent of the deposits or ten times the NOF, whichever is lower, can be deployed in other assets. These companies are characterised by poor NOF and as such they are obliged to invest the entire deposit funds as directed by RBI. Serious action has been taken against the erring RNBCs and more than 200 such companies have so far been prohibited from acceptance of deposits.

All you wanted to know about NBFCs

E. Depositor Protection Issues

60. Can a company pre-pay its public deposits? +

An NBFC accepts deposits under a mutual contract with its depositors. In case a depositor requests for pre-mature payment, Reserve Bank of India has prescribed Regulations for such an eventuality in the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998 wherein it is specified that NBFCs cannot grant any loan against a public deposit or make premature repayment of a public deposit within a period of three months (lock-in period) from the date of its acceptance. However, in the event of death of a depositor, the company may, even within the lock-in period, repay the deposit at the request of the joint holders with survivor clause / nominee / legal heir only against submission of relevant proof, to the satisfaction of the companyAn NBFC, (which is not a problem company) subject to above provisions, may permit after the lock–in period, premature repayment of a public deposit at its sole discretion, at the rate of interest prescribed by the BankA problem NBFC is prohibited from making premature repayment of any deposits or granting any loan against public deposit/deposits, as the case may be. The prohibition shall not, however, apply in the case of death of depositor or repayment of tiny deposits i.e. up to ₹ 10000/- subject to lock in period of 3 months in the latter case.

FAQs on Non-Banking Financial Companies

Nomination facility

All you wanted to know about NBFCs

E. Depositor Protection Issues

61. What is the liquid assets requirement for the deposit taking companies? Where are these assets kept? Do depositors have any claims on them? +

In terms of Section 45-IB of the RBI Act, 1934, the minimum level of liquid assets to be maintained by NBFCs is 15 per cent of public deposits outstanding as on the last working day of the second preceding quarter. Of the 15%, NBFCs are required to invest not less than ten percent in approved securities and the remaining 5% can be in unencumbered term deposits with any scheduled commercial bank. Thus, the liquid assets may consist of Government securities, Government guaranteed bonds and term deposits with any scheduled commercial bank.The investment in Government securities should be in dematerialised form which can be maintained in Constituents’ Subsidiary General Ledger (CSGL) Account with a scheduled commercial bank (SCB) / Stock Holding Corporation of India Limited (SHICL). In case of Government guaranteed bonds the same may be kept in dematerialised form with SCB/SHCIL or in a dematerialised account with depositories [National Securities Depository Ltd. (NSDL)/Central Depository Services (India) Ltd. (CDSL)] through a depository participant registered with Securities & Exchange Board of India (SEBI). However in case there are Government bonds which are in physical form the same may be kept in safe custody of SCB/SHCIL.NBFCs have been directed to maintain the mandated liquid asset securities in a dematerialised form with the entities stated above at a place where the registered office of the company is situated. However, if an NBFC intends to entrust the securities at a place other than the place at which its registered office is located, it may do so after obtaining the permission of RBI in writing. It may be noted that liquid assets in approved securities will have to be maintained in dematerialised form only. The liquid assets maintained as above are to be utilised for payment of claims of depositors. However, deposits being unsecured in nature, depositors do not have direct claim on liquid assets.

62. What does RBI do to protect the interest of NBFC depositors? +

RBI has issued detailed regulations on deposit acceptance, including the quantum of deposits that can be collected, mandatory credit rating, mandatory maintenance of liquid assets for repayment to depositors, manner of maintenance of its deposit books, prudential regulations including maintenance of adequate capital, limitations on exposures, and inspection of the NBFCs, besides others, to ensure that the NBFCs function on sound lines. If the Bank observes through its inspection or audit of any NBFC or through complaints or through market intelligence, that a certain NBFC is not complying with RBI directions, it may prohibit the NBFC from accepting further deposits and prohibit it from selling its assets. In addition, if the depositor has complained to the Company Law Board (CLB) which has ordered repayment and the NBFC has not complied with the CLB order, RBI can initiate prosecution of the NBFC, including criminal action and winding up of the company.More importantly, RBI initiates prompt action, including imposing penalties and taking legal action against companies which are found to be violating RBI's instructions/norms on basis of Market Intelligence reports, complaints, exception reports from statutory auditors of the companies, information received through SLCC meetings, etc. The Reserve Bank immediately shares such information with all the financial sector regulators and enforcement agencies in the State Level Coordination Committee Meetings.As a premier public policy institution, as part of its public policy measure, the Reserve Bank of India has been in the forefront in taking several initiatives to create awareness among the general public on the need to be careful while investing their hard earned money. The initiatives include issue of cautionary notices in print media and distribution of informative and educative brochures/pamphlets and close interaction with the public during awareness/outreach programs, Townhall events, participation in State Government sponsored trade fairs and exhibitions. At times, it even requests newspapers with large circulation (English and vernacular) to desist from accepting advertisements from unincorporated entities seeking deposits.

63. Who rates deposit taking NBFCs for acceptance of deposit? +

NBFCs may get itself rated by any of the six rating agencies namely, CRISIL, CARE, ICRA, FITCH Ratings India Pvt. Ltd, Brickwork Ratings India Pvt. Ltd. and SMERA.

64. What are the symbols of minimum investment grade rating of different companies? When a company’s rating is downgraded, does it have to bring down its level of public deposits immediately or over a period of time? +

The symbols of minimum investment grade rating of the Credit rating agencies are:

Name of rating agencies	Nomenclature of minimum investment grade credit rating (MIGR)
CRISIL	FA- (FA MINUS)
ICRA	MA- (MA MINUS)
CARE	CARE BBB (FD)
FITCH Ratings India Pvt. Ltd. SMERA	tA-(ind)(FD) SMERA A
Brickwork Ratings India Pvt. Ltd.	BWR FBBB

It may be added that A- is not equivalent to A, AA- is not equivalent to AA and AAA- is not equivalent to AAA.

However, if rating of an NBFC is downgraded to below minimum investment grade rating, it has to stop accepting public deposits, report the position within fifteen working days to the RBI and bring within three years from the date of such downgrading of credit rating, the amount of public deposit to nil. With the introduction of revised regulatory framework in November 2014 deposit taking NBFCs have to mandatorily get investment grade credit rating for being eligible to accept public deposits.

65. What is the purpose of enacting Protection of Interest of Depositors in Financial Establishments Act by the State Governments? +

The purpose of enacting this law is to protect the interests of the depositors. The provisions of RBI Act are directed towards enabling RBI to issue prudential regulations that make the financial entities function on sound lines. RBI is a civil body and the RBI act is a civil Act. Both do not have specific provisions to effect recovery by attachment and sale of assets of the defaulting companies, entities or their officials. It is the State government machinery which can effectively do this. The Protection of Interest of Depositors in Financial Establishments Acts, confers adequate powers on the State Governments to attach and sell assets of the defaulting companies, entities and their officials.