FAQ Page 1 - RBI - Reserve Bank of India
Core Investment Companies
Core Investment Companies (CICs)
Ans: Yes, company which is a CIC and has achieved the balance sheet size of Rs.100 crore as per its last audited annual financial statement is required to apply to the Bank for registration as a CIC-SI, subject to its meeting the other conditions for being identified as systemically important CIC.
Domestic Deposits
IV. Advances against shares and debentures
Retail Direct Scheme
Investment and Account holdings related queries
Indian Currency
E) Counterfeits/Forgeries
A forged note can be identified on the basis of the security features which are present in a genuine Indian currency note. These features are easily identifiable by seeing, touching and tilting the note.
Foreign Investment in India
IV. Reporting Delays
FAQs on Non-Banking Financial Companies
Extent of regulations over NBFCs accepting public deposits and not accepting public deposits
External Commercial Borrowings (ECB) and Trade Credits
PART II: TRADE CREDITS (TC)
AD banks can issue SBLC on behalf of their customers for availing short term trade credit from overseas lenders in foreign currency subject to such SBLCs complying with the provisions contained in Department of Banking Regulation Master Circular No. DBR. No. Dir. BC.11/13.03.00/2015-16 dated July 1, 2015 on “Guarantees and Co-acceptances”, as amended from time to time.
All you wanted to know about NBFCs
D. Definition of deposits, Eligible / Ineligible Institutions to accept deposits and Related Matters
Domestic Deposits
IV. Advances against shares and debentures
Banks can purchase letter of allotment in respect of PSU bonds subject to the following conditions.
-
The transactions (other than interbank transactions) should be undertaken only through recognized Stock Exchanges and registered brokers.
-
While purchasing the bonds, the bank should ensure that it gets a clear title to the security and the security is tradable in the secondary market.
- The bank should prescribe its internal guidelines with the approval of the Board for undertaking such transaction.
Retail Direct Scheme
Investment and Account holdings related queries
Indian Currency
E) Counterfeits/Forgeries
Counterfeiting banknotes/using as genuine, forged or counterfeit banknotes/possession of forged or counterfeit banknote/making or possessing instruments or materials for forging or counterfeiting banknotes/making or using documents resembling banknotes are offences under Sections 489A to 489E of the Indian Penal Code and are punishable in the Courts of Law by fine or imprisonment ranging from seven years to life imprisonment or both, depending on the offence.
The Government of India has framed Investigation of High Quality Counterfeit Indian Currency Offences Rules, 2013 under Unlawful Activities (Prevention) Act (UAPA), 1967. The Third Schedule of the Act defines High Quality Counterfeit Indian Currency Note. Activity of production, smuggling or circulation of High Quality Counterfeit Indian Notes has been brought under the ambit of UAPA, 1967.
Foreign Investment in India
IV. Reporting Delays
FAQs on Non-Banking Financial Companies
Repayment of matured deposits
All you wanted to know about NBFCs
D. Definition of deposits, Eligible / Ineligible Institutions to accept deposits and Related Matters
External Commercial Borrowings (ECB) and Trade Credits
PART II: TRADE CREDITS (TC)
Domestic Deposits
IV. Advances against shares and debentures
Retail Direct Scheme
Investment and Account holdings related queries
Indian Currency
E) Counterfeits/Forgeries
Mere possession of a forged note does not attract punishment. Possession of any forged or counterfeit banknotes, knowing or having reason to believe the same to be forged or counterfeit and intending to use the same as genuine or that it may be used as genuine, is punishable under Section 489C of Indian Penal Code, 1860.
Foreign Investment in India
IV. Reporting Delays
Answer: The reporting requirements are laid down in the Master Direction on Reporting under Foreign Exchange Management Act, 1999.
FAQs on Non-Banking Financial Companies
Repayment of matured deposits
All you wanted to know about NBFCs
D. Definition of deposits, Eligible / Ineligible Institutions to accept deposits and Related Matters
Retail Direct Scheme
Investment and Account holdings related queries
Domestic Deposits
IV. Advances against shares and debentures
Indian Currency
E) Counterfeits/Forgeries
The Reserve Bank of India has been organizing training sessions on the authentication of banknotes security features for people handling significant amounts of cash like banks/consumer forums/merchant associations/educational institutions/police professionals. Apart from the training sessions, information on security features of banknotes is also available on the Bank’s website.
Foreign Investment in India
IV. Reporting Delays
FAQs on Non-Banking Financial Companies
Repayment of matured deposits
All you wanted to know about NBFCs
D. Definition of deposits, Eligible / Ineligible Institutions to accept deposits and Related Matters
Retail Direct Scheme
Investment and Account holdings related queries
Yes, securities can be gifted/transferred to a relative/friend/anybody who fulfills the eligibility criteria. The bonds shall be transferred in accordance with the provisions of the Government Securities Act, 2006 and Government Securities Regulations, 2007.
Domestic Deposits
IV. Advances against shares and debentures
Indian Currency
F) COINS
Coins in India are presently being issued in denominations of 50 paise, one rupee, two rupees, five rupees, ten rupees and twenty rupees. Coins up to 50 paise are called 'small coins' and coins of Rupee one and above are called 'Rupee Coins'. Coins can be issued up to the denomination of ₹1000 under The Coinage Act, 2011.
FAQs on Non-Banking Financial Companies
Prudential Norms
All you wanted to know about NBFCs
D. Definition of deposits, Eligible / Ineligible Institutions to accept deposits and Related Matters
Domestic Deposits
IV. Advances against shares and debentures
Retail Direct Scheme
Investment and Account holdings related queries
Indian Currency
F) COINS
Twenty five (25) paise coins have been withdrawn from circulation with effect from June 30, 2011 and are, therefore, no more legal tender. Coins of denominations below 25 paise were withdrawn from circulation much earlier. All other denominations of coins of various size, theme and design minted by Government of India under The Coinage Act, 2011 and issued by RBI for circulation from time to time, continue to remain legal tender.
FAQs on Non-Banking Financial Companies
Prudential Norms
- Each category of quoted investments is to be valued scrip-wise. Category of investment means the different types of securities under each head viz. equity shares, preference shares, debentures, bonds and Government securities. Only quoted investments can be classified as long term or current investments. The long term investments are allowed to be valued as per AS-13 of the ICAI but the current investments are required to be valued at their market price. However, the NBFCs have been permitted under Prudential Norm Directions, the facility of block valuation method for accounting for the investments. The net of depreciation and the appreciation in the value of the current quoted investments, is only required to be charged to the Profit and Loss Account of the current year. The appreciation in the value of current investments in any category cannot be booked as profit. The concept of block valuation is explained below :
Example No. 1
Name of the scrip |
Market value |
Book value |
Difference (+)/(-) |
|
A |
200 |
150 |
(+) 50 |
|
B |
210 |
180 |
(+) 30 |
|
C |
180 |
240 |
(-) 60 |
|
D |
240 |
300 |
(-) 60 |
Total appreciation Rs. 80/-
Total depreciation Rs. 120/-
Net depreciation Rs. 40/- to be charged to Profit and Loss |
|
Account as per provisions for |
Example No. 2
Name of the scrip |
Market value |
Book value |
Difference (+)/(-) |
|
A |
150 |
200 |
(-) 50 |
|
B |
180 |
210 |
(-) 30 |
|
C |
240 |
180 |
(+) 60 |
|
D |
300 |
240 |
(+) 60 |
Total appreciation Rs. 120/-
Total depreciation Rs. 80/-
Net appreciation Rs. 40/- to be ignored.
This appreciation in the value of equity shares cannot be adjusted against the depreciation in the value of any other category of securities.
All you wanted to know about NBFCs
E. Depositor Protection Issues
Some of the important regulations relating to acceptance of deposits by NBFCs are as under:
-
The NBFCs are allowed to accept/renew public deposits for a minimum period of 12 months and maximum period of 60 months. They cannot accept deposits repayable on demand.
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NBFCs cannot offer interest rates higher than the ceiling rate prescribed by RBI from time to time. The present ceiling is 12.5 per cent per annum. The interest may be paid or compounded at rests not shorter than monthly rests.
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NBFCs cannot offer gifts/incentives or any other additional benefit to the depositors.
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NBFCs should have minimum investment grade credit rating.
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The deposits with NBFCs are not insured.
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The repayment of deposits by NBFCs is not guaranteed by RBI.
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Certain mandatory disclosures are to be made about the company in the Application Form issued by the company soliciting deposits.
Domestic Deposits
V. Donations
Retail Direct Scheme
Investment and Account holdings related queries
Indian Currency
F) COINS
RBI has not prescribed any limit for coin deposits by customers with banks. Banks are free to accept any amount of coins from their customers.
All you wanted to know about NBFCs
E. Depositor Protection Issues
A depositor wanting to place deposit with an NBFC must take the following precautions before placing deposits:
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That the NBFC is registered with RBI and specifically authorized by the RBI to accept deposits. A list of deposit taking NBFCs entitled to accept deposits is available at www.rbi.org.in → Sitemap → NBFC List. The depositor should check the list of NBFCs permitted to accept public deposits and also check that it is not appearing in the list of companies prohibited from accepting deposits, which is available at www.rbi.org.in → Sitemap → NBFC List → NBFCs who have been issued prohibitory orders, winding up petitions filed and legal cases under Chapter IIIB, IIIC and others.
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NBFCs have to prominently display the Certificate of Registration (CoR) issued by the Reserve Bank on its site. This certificate should also reflect that the NBFC has been specifically authorized by RBI to accept deposits. Depositors must scrutinize the certificate to ensure that the NBFC is authorized to accept deposits.
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The maximum interest rate that an NBFC can pay to a depositor should not exceed 12.5%. The Reserve Bank keeps altering the interest rates depending on the macro-economic environment. The Reserve Bank publishes the change in the interest rates on www.rbi.org.in → Sitemap → NBFC List → FAQs.
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The depositor must insist on a proper receipt for every amount of deposit placed with the company. The receipt should be duly signed by an officer authorized by the company and should state the date of the deposit, the name of the depositor, the amount in words and figures, rate of interest payable, maturity date and amount.
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In the case of brokers/agents etc collecting public deposits on behalf of NBFCs, the depositors should satisfy themselves that the brokers/agents are duly authorized by the NBFC.
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The depositor must bear in mind that public deposits are unsecured and Deposit Insurance facility is not available to depositors of NBFCs.
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The Reserve Bank of India does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for repayment of deposits/discharge of the liabilities by the company.
FAQs on Non-Banking Financial Companies
Prudential Norms
A. Earning Value : |
Average Profit after tax (net of |
||
dividend on preference shares |
|||
and extra ordinary items ) for |
|||
the last three years |
Capitalisation |
||
X |
factor |
||
Number of equity shares |
Hypothetically, the profit after tax for the last three |
} |
Rs. 100.00 lakhs, |
financial years net of dividend on preference shares } |
Rs. 120.00 lakhs |
|
and net of extra ordinary items |
} & |
Rs. 140.00 lakhs |
No. of equity shares of the company |
10,00,000 shares |
|
The investee company is a predominantly manufacturing |
||
company and the capitalisation factor would be |
: 8 per cent |
|
The earning value will be worked out as under : |
(100.00+120.00+140.00) |
100 |
||
X |
--- |
= Rs.150/- |
|
3 X 10,00,000 |
8 |
Domestic Deposits
V. Donations
Retail Direct Scheme
Contact us
You can reach us in three ways:
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Toll free phone number: 1800 267 7955 (between 9 am to 7 pm on any working day).
-
E-mail id: support@rbiretaildirect.org.in
-
Raise a request on the Retail Direct portal.
For additional details on using the Retail Direct portal, you may refer to the User Manual in the Help section of the Retail Direct Portal.
Indian Currency
F) COINS
The One Rupee notes issued under the Currency Ordinance, 1940 are legal tender and included in the expression Rupee coin for all the purposes of the Reserve Bank of India Act, 1934. Since the rupee coins issued by Government constitute the liabilities of the Government, one rupee Note is also liability of the Government of India.
FAQs on Non-Banking Financial Companies
Prudential Norms
- The Prudential Norms have prescribed that the unquoted shares should be valued at break up value. However, an NBFC can also value these shares at fair value, if it so desires.
Break up value and fair value are to be calculated as per the formula given in the Directions. The formula is illustrated as under :
If the paid equity capital of the company is = Rs. 1,00,00,000
The free reserves net of intangible assets
and deferred revenue expenditure = Rs. 3,20,00,000
Number of equity shares = 10,00,000 shares
The break up value will be : |
1,00,00,000 + 3,20,00,000 |
= Rs. 42/- |
10,00,000 |
If we take the earning value worked out in the previous question, and since we know that the fair value is the mean of the break up value and the earning value, the fair value will be |
150+42 |
= Rs.96/- |
2 |
In the given case, the company may value its shares at fair value viz, Rs.96/- which is higher than the break up value at Rs.42/- or cost, whichever is lower.
All you wanted to know about NBFCs
E. Depositor Protection Issues
Domestic Deposits
V. Donations
Indian Currency
F) COINS
Yes. Different designs of ₹10 coins are currently in circulation. All coins of ₹10 denomination minted from time to time by the Government of India (with/without the Rupee symbol) are legal tender. For more details kindly see our Press Release issued in this regard which is available at the following link www.rbi.org.in>>Issuer of currency>>Press Release>>January 17, 2018. /en/web/rbi/-/press-releases/rbi-reiterates-legal-tender-status-of-%E2%82%B9-10-coins-of-different-designs-42887
FAQs on Non-Banking Financial Companies
Prudential Norms
All you wanted to know about NBFCs
E. Depositor Protection Issues
Domestic Deposits
VI. Premises Loan
-
The Board of Directors of the banks should lay down the policy and formulate operational guidelines separately in respect of metropolitan, urban, semi-urban and rural areas covering all areas in respect of acquiring premises on lease/ rental basis for the banks’ use. These guidelines should include also delegation of powers at various levels. The decision in regard to surrendering or shifting of premises other than at rural centers should be taken at the central office level by a committee of senior executives.
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The Board of Directors of the bank should lay down separate policy for granting of loans to landlords who provide them premises on lease/ rental basis. The rate of interest to be charged on such loans should be fixed as per the lending rate directives issued by RBI with BPLR as the minimum lending rate for the loans above Rs.2 lakhs. The rate of interest may be simple or compound, in accordance with the usual practice of the bank, as applicable to other term loans.
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Banks should provide a suitable mechanism for redressing the genuine grievances of the landlord expeditiously.
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The details of negotiated contracts in respect of advances to landlords and rental (including taxes etc. and deposits of Rs.25 lakhs and above) on premises taken on lease/ rental by the public sector banks, should be reported to the Central Bureau of Investigation (CBI) as per the extant Government instructions. This requirement will not be applicable to banks in the private sector.
Indian Currency
F) COINS
The Government of India is responsible for the designing and minting of coins in various denominations.
FAQs on Non-Banking Financial Companies
Prudential Norms
All you wanted to know about NBFCs
E. Depositor Protection Issues
When an NBFC fails to repay any deposit or part thereof in accordance with the terms and conditions of such deposit, the Company Law Board (CLB) either on its own motion or on an application from the depositor, directs by order the Non-Banking Financial Company to make repayment of such deposit or part thereof forthwith or within such time and subject to such conditions as may be specified in the order. After making the payment, the company will need to file the compliance with the local office of the Reserve Bank of India.
As explained above, the depositor can approach CLB by mailing an application in prescribed form to the appropriate bench of the Company Law Board according to its territorial jurisdiction along with the prescribed fee.
Domestic Deposits
VII. Service charges
Indian Currency
F) COINS
The Government of India decides on the quantity of coins to be minted on the basis of indent received from the Reserve Bank on yearly basis.
All you wanted to know about NBFCs
E. Depositor Protection Issues
The details of addresses and territorial jurisdiction of the bench officers of CLB are as under:
S. No. | Benches | Jurisdiction | Telephone No. |
---|---|---|---|
1. | Company Law Board Principal Bench Paryavaran Bhawan B-Block, 3rd Floor C.G.O. Complex Lodhi Road,New Delhi – 110 003 |
All States & Union Territories | 011 – 24366126 |
2. | Company Law Board New Delhi Bench Paryavaran Bhawan B-Block, 3rd Floor C.G.O. Complex Lodhi Road,New Delhi – 110 003 |
States of Delhi, Haryana, Himachal Pradesh, Jammu & Kashmir, Punjab, Rajasthan, Uttar Pradesh, Uttarakhand and Union Territories of Chandigarh. | 011 – 24363671, 011 – 24362324 |
3. | Company Law Board Kolkata Bench 5, Esplande Row(West) Kolkata – 700 001 |
States of Arunachal Pradesh, Assam, Bihar, Manipur, Meghalaya, Nagaland, Orissa, Sikkim, Tripura, West Bengal, Jharkhand and Union Territories of Andaman and Nicobar Island and Mizoram. | 033 – 22486330 |
4. | Company Law Board Mumbai Bench N.T.C. House, 2ND Floor, 15 Narottam Morarjee Marg, Ballard Estate, Mumbai – 400 038 |
States of Goa, Gujarat, Madhya Pradesh, Maharashtra, Chhattisgarh and (Union Territories of Dadra and Nagar Haveli and Damman and Diu) | 022 – 22619636 |
5. | Company Law Board, Chennai Bench Corporate Bhawan (UTI Building), 3rd Floor, No. 29 Rajaji Salari, Chennai – 600001. |
States of Andhra Pradesh, Karnataka, Kerala, Tamil Nadu and Union Territories of Pondicherry and Lakshadweep Island. | 044 – 25262791 |
FAQs on Non-Banking Financial Companies
Depositor Awareness
Indian Currency
F) COINS
The Reserve Bank has instructed the banks to accept coins for transactions and exchange at all their branches. The public can continue to accept these coins as legal tender in all their transactions without any hesitation. A press release in this regard can be accessed at the following link: /en/web/rbi/-/press-releases/public-can-continue-to-accept-all-the-coins-as-legal-tender-rbi-47414
FAQs on Non-Banking Financial Companies
Depositor Awareness
All you wanted to know about NBFCs
E. Depositor Protection Issues
Indian Currency
F) 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
All you wanted to know about NBFCs
E. Depositor Protection Issues
Indian Currency
F) COINS
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
All you wanted to know about NBFCs
E. Depositor Protection Issues
FAQs on Non-Banking Financial Companies
Depositor Awareness
All you wanted to know about NBFCs
E. Depositor Protection Issues
FAQs on Non-Banking Financial Companies
Depositor Awareness
All you wanted to know about NBFCs
E. Depositor Protection Issues
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
All you wanted to know about NBFCs
E. Depositor Protection Issues
FAQs on Non-Banking Financial Companies
Nomination facility
All you wanted to know about NBFCs
E. Depositor Protection Issues
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.
F. Collective Investment Schemes (CIS) and Chit Funds
G. Money Circulation/Multi-Level Marketing (MLM)/ Ponzi Schemes/ Unincorporated Bodies (UIBs)
No, Multi-Level Marketing companies, Direct Selling Companies, Online Selling Companies do not fall under the purview of RBI. Activities of these companies fall under the regulatory/administrative domain of respective state government. The list of regulators and the entities regulated by them are as provided in Annex I.
Unincorporated bodies (UIBs) include an individual, a firm or an unincorporated association of individuals. In terms of provision of section 45S of RBI act, these entities are prohibited from accepting any deposit. The Act makes acceptance of deposits by such UIBs punishable with imprisonment or fine or both. The State government has to play a proactive role in arresting the illegal activities of such entities to protect interests of depositors/investors.
UIBs do not come under the regulatory domain of RBI. Whenever RBI receives any complaints against UIBs, it immediately forwards the same to the state government police agencies (Economic Offences Wing (EOW)). The complainants are advised to lodge the complaints directly with the State government police authorities (EOW) so that appropriate action against the culprits is taken immediately and the process is hastened.
As per Section 45T of RBI Act, both the RBI and State Governments have been given concurrent powers. Nonetheless, in order to take immediate action against the offender, the information should immediately be passed on to the State Police or the Economic Offences Wing of the concerned State who can take prompt and appropriate action. Since the State Government machinery is widespread and the State Government is also empowered to take action under the provisions of RBI Act, 1934, any information on such entities accepting deposits may be provided immediately to the respective State Government’s Police Department/EOW.
Many of the State Governments have enacted the State Protection of Interests of Depositors in Financial Establishments Act, which empowers the State Government to take appropriate and timely action.
RBI on its part has taken various steps to curb activities of UIBs which includes spreading awareness through advertisements in leading newspapers to sensitise public, organize various investors awareness programmes in various districts of the country, keeps close liaison with the law enforcing agencies (Economic Offences Wing).
The two Charts given at Annex I and II depict the activities and the regulators overseeing the same. Complaints may hence be addressed to the concerned regulator. If the activity is a banned activity, the aggrieved person can approach the State Police/Economic Offences Wing of the State Police and lodge a suitable complaint.
Page Last Updated on: December 10, 2022