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All you wanted to know about NBFCs

D. Definition of deposits, Eligible / Ineligible Institutions to accept deposits and Related Matters

41. Can a Co-operative Credit Society accept deposits from the public? +

No. Co-operative Credit Societies cannot accept deposits from general public. They can accept deposits only from their members within the limit specified in their bye laws. It may be noted that Co-operative Credit Societies do not fall under the regulatory purview of the Reserve Bank and fall under the purview of Registrar of Cooperative Societies.

FAQs on Non-Banking Financial Companies

Liquid Asset requirement

42. The companies have been advised to obtain prior approval of the Regional Office of the Reserve Bank of India if it is intended to lodge the securities with a bank branch at a place other than the place of its Registered Office. Please explain the purpose behind it. +

Most of the companies are unitary entities. They function from the place of their Registered Office. Some of the large sized companies as also some others may intend to keep the securities at metropolitan centres for operational advantages. The place where the securities are held could be outside the jurisdiction of the concerned Regional Office of RBI because the jurisdictional areas are decided on the basis of place of location of the Registered Office of the companies. In such cases, it is imperative for the Regional Offices to know the place where the securities are being kept.

External Commercial Borrowings (ECB) and Trade Credits

K. MISCELLANEOUS

42. When ECB is partially converted into equity, should the remaining ECB amount comply with all the ECB guidelines? +

Yes. The part conversion of ECB into equity will be freely permitted only when the part amount remaining as ECB complies with all the applicable ECB norms.

Foreign Investment in India

III. Investment in other securities

Q.42: What are the provisions with regard to Downstream investment for an investment vehicle ? +

Answer: Investment made by an Investment Vehicle into an Indian company or an LLP will be indirect foreign investment for the investee company or the LLP, as the case may be, if either the Sponsor or the Manager or the Investment Manager (i) is not owned and not controlled by resident Indian citizens or (ii) is owned or controlled by persons resident outside India.

Domestic Deposits

IV. Advances against shares and debentures

42. Which of the bills should not be discounted by banks? +

The bills covering payment of electricity charges, customs duty, hire purchase/ lease rental installments, sale of securities and other types of financial accommodation should not be discounted by banks.

Retail Direct Scheme

Investment and Account holdings related queries

42. What other fees/ charges are applicable? +

No fee will be charged for opening and maintaining the Retail Direct Gilt (RDG) account with RBI. No fee will be charged by RBI at the time of submission of bids in primary auctions. However, applicable payment gateway charges will have to be borne by the investor while funding his/her purchases.

Indian Currency

E) Counterfeits/Forgeries

1. What is a forged note? +

A suspected forged note, counterfeit note or fake note is any note which does not possess the characteristics of genuine Indian currency note.

All you wanted to know about NBFCs

D. Definition of deposits, Eligible / Ineligible Institutions to accept deposits and Related Matters

42. Can a Salary Earners’ Society accept deposits from the public? +

No. These societies are formed for salaried employees and hence they can accept deposit only from their own members and not from general public. It may be noted that Salary Earners’ Societies do not fall under the regulatory purview of the Reserve Bank and fall under the purview of Registrar of Cooperative Societies.

Foreign Investment in India

III. Investment in other securities

Q.43: What are the restrictions on the investments made by an AIF ? +

Answer: An Alternative Investment Fund (Category III) with foreign investment can make portfolio investment in only those securities or instruments in which an FPI is allowed to invest under the Act, rules or regulations made thereunder.IV. Reporting Delays

FAQs on Non-Banking Financial Companies

Extent of regulations over NBFCs accepting public deposits and not accepting public deposits

43. What are the responsibilities of the NBFCs accepting/holding public deposits with regard to submission of Returns and other information to RBI? +

The NBFCs accepting public deposits shall furnish to RBI Certificate from the Auditors regarding solvency of the company in repayment of the deposits as and when the claims arise; Balance Sheet and the Auditors Reports submitted to the Board of Directors as also to the Shareholders of the company; Statutory Annual Return on deposits in the First Schedule; Quarterly Return on liquid assets; Half-yearly Return on prudential norms; and a copy of the Credit Rating once a year alongwith one of the Half-yearly Returns on prudential norms as at (v) above.