Over 2,900 applications for registration as non-banking finance companies (NBFCs) are pending with the Reserve Bank of India (RBI) as the apex bank awaits for the enactment of the Financial Companies Regulation Bill 2000.
This is of the 36,414 applications received by RBI till March 2002, of which 14,079 have been approved.
The RBI has rejected 19,058 applications. Of those approved, only 780 NBFCs have been allowed to accept or hold deposits from the public. The RBI has kept 2,916 applications from financial companies in abeyance pending the enactment of the Financial Companies Regulation Bill 2000.
More From This Section
The Bill, still pending with the parliament, will enforce stricter measures on those companies seeking to set up themselves as NBFCs.
For instance, the 780 companies approved by RBI to accept and hold public deposits would be required to have a minimum net-owned fund (NoF) of Rs 10 crore when the bill becomes a law.
This is against the present minimum NoF level of Rs 2 crore as in the case of existing deposit taking companies. Under present regulations, new companies are not permitted to accept public deposits for a period of two years from commencement of operations.
RBI will be further empowered to appoint special officers on a delinquent financial company. The financial outfit would have no recourse to the Company Law Board to seek deferment of depositors' dues. The prohibitory provisions for incorporated bodies will continue in the new bill.
However, the role of exercising the powers for enforcement have been exclusively entrusted to state governments, in addition to the powers under the respective state laws for protecting the interests of investors in financial establishments.