Don’t miss the latest developments in business and finance.

RBI seeks more details on NBFCs

Image
BS Reporter Mumbai
Last Updated : Jan 29 2013 | 2:16 AM IST

Amid the global turmoil in the financial sector, the Reserve Bank of India (RBI) today further tightened the norms for non-banking finance companies (NBFC), asking auditors to prepare reports in addition to those prescribed by the Companies Act.

The main focus is on NBFCs that accept public deposits but in case of others too RBI wants auditors to report if the company has a certificate of registration from the regulator and if the board passed a resolution for non-acceptance of public deposits.

The new norms, which replace the earlier guidelines issued in 1998, mandate that auditors of public deposit taking NBFC to mention in the report whether the company borrowed from public through unsecured non-convertible debentures and whether it borrows from its shareholders in case it's a public limited company.

A host of other aspects like compliance with income recognition norms, the level of liquid assets, capital adequacy norms and asset classification guidelines, among others also need to be mentioned.

The report must also state if the company has defaulted in paying its depositors the interest or the principal amount. Besides, it must include capital adequacy ratio of certain kinds of NBFCs, RBI said in a late evening circular.

When contacted, an RBI official said that the new directions have not been issued because of ongoing global financial crisis but are a rejig of the existing norms.

More From This Section

In recent months, the regulator has tightened the capital adequacy norms for these finance companies besides asking residuary NBFCs, which accept public deposits, to stop accessing fresh funds from the public.

The residuary NBFCs have also been asked to ensure that they invest in government papers so that depositors are protected.

Also Read

First Published: Sep 24 2008 | 12:00 AM IST

Next Story