RBI forms working group to review regulatory norms on core investment firms

The Reserve Bank of India (RBI) has constituted a working group to review the regulatory guidelines and supervisory framework applicable for core investment companies (CIC), as the extant framework is not adequate to handle the complex corporate governance structures that the companies have now become.

CICs are holding companies of non-banking financial companies (NBFCs). Over time, “…corporate group structures have become more complex involving multiple layering and leveraging, which has led to greater inter-connectedness with the financial system through their access to public funds. Further, in light of recent developments, there is a need to strengthen the corporate governance framework of CICs,” the RBI said in a notification.

The working group will be headed by Tapan Ray, non-executive chairman of Central Bank of India and former secretary, Ministry of Corporate Affairs. Other members would include Lily Vadera, the RBI’s executive director (ED), Amarjeet Singh, ED of Securities and Exchange Board of India, T Rabishankar, chief general manager of RBI, H K Jena, deputy managing director, State Bank of India, and N S Venkatesh, chief executive of Association of Mutual Funds in India.

The terms of reference of the working group would be to examine the current regulatory framework for CICs in terms of adequacy, efficacy and effectiveness of every component thereof and suggest changes therein, to assess the appropriateness of and suggest changes to the current approach of the RBI towards registration of CICs, to suggest measures to strengthen corporate governance and disclosure requirements for CICs. And to suggest appropriate measures to enhance the RBI’s off-sight surveillance and on-site supervision over CICs.