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Foreign Investment in India

III. Investment in other securities

Answer: Foreign Venture Capital Investor’ (FVCI) means an investor incorporated and established outside India and registered with Securities and Exchange Board of India under Securities and Exchange Board of India (Foreign Venture Capital Investors) Regulations, 2000

All you wanted to know about NBFCs

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

A company which does not have financial assets which are more than 50% of its total assets and does not derive at least 50% of its gross income from such assets is not an NBFC. Its principal business would be non-financial activity like agricultural operations, industrial activity, purchase or sale of goods or purchase/construction of immovable property, and will be a non-banking non-financial company. Acceptance of deposits by a Non-Banking Non-Financial Company are governed by the rules and regulations issued by the Ministry of Corporate Affairs.

FAQs on Non-Banking Financial Companies

Liquid Asset requirement

No. An NBFC is required to invest in approved securities a part of the deposits, for compliance with the provisions of section 45IB of the RBI Act. The term `approved securities’ has been defined in the RBI Act itself which means the Government securities and Government guaranteed bonds. Hence it is not permissible for the NBFCs to maintain a part of the securities in the form of investments in bonds of and deposits with banks.

Retail Direct Scheme

Investment and Account holdings related queries

In the non-competitive segment of primary auctions, the price at which the securities are allotted is the weighted average price of the successful competitive bids in the auction. Since this weighted average price can be calculated only after the auction is over, the price of the security through the non-competitive segment is unknown during the time of bidding. To cover for this uncertainty, a markup is applied in case the weighted average price comes out to be higher.

Domestic Deposits

IV. Advances against shares and debentures

No.

Government Securities Market in India – A Primer

External Commercial Borrowings (ECB) and Trade Credits

J. Reporting

No, in case no changes are made in terms and conditions of ECB, there is no need to file revised Form ECB (erstwhile Form 83).

Foreign Investment in India

III. Investment in other securities

Answer: A SEBI registered Foreign Venture Capital Investor may make investment in terms of schedule 7 of FEMA 20(R) as per the conditions prescribed therein.

Indian Currency

D) Soiled, Mutilated and Imperfect Banknotes

The presence or absence of a serial number or other specific feature is not a determining factor when assessing damaged banknotes for value under the Reserve Bank of India (Note Refund) Rules, 2009 [as amended by Reserve Bank of India (Note Refund) Amendment Rules, 2018].

All you wanted to know about NBFCs

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

The Reserve Bank's overarching concern while regulating/ supervising any financial entity is protection of depositors' interest. Depositors place deposit with any entity on trust unlike an investor who invests in the shares of a company with the intention of sharing the risk as well as return with the promoters. Protection of depositors' interest, thus, is supreme in financial regulation. Further, the deposits of NBFCs do not have insurance from the Deposit Insurance and Credit Guarantee Corporation.

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Page Last Updated on: December 10, 2022

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