RBI tightens merger and amalgamation norms for NBFCs
Updated: May 27, 2014 01:55:24pm
Mumbai, May 27 (KNN) The Reserve Bank has said that all non-banking finance companies (NBFC) will need its prior approval to acquire or merge with similar entities.
Earlier, only deposit taking NBFCs were required to have the central bank’s prior approval.
"The prior written permission of the Reserve Bank of India shall be required for any takeover or acquisition of control of an NBFC, whether by acquisition of shares or otherwise," RBI said in a notification yesterday.
“The requirement is applicable to all NBFCs, irrespective of it being a deposit taking or a non-deposit taking NBFC,” RBI said.
The regulator also clarified RBI’s prior approval will not be required if a NBFC is acquiring less than 10 per cent of another entity.
The RBI said these directions shall come into force with immediate effect.
“Under Section 45 IA (4)(c) of the RBI Act, 1934, a certificate of Registration can only be given to a company if the Bank is satisfied, inter alia, that the general character of the management or the proposed management of the non-banking financial company shall not be prejudicial to the public interest or the interests of its depositors,” RBI said.
Meanwhile, Reserve Bank has authorised three non-banking entities for setting up white label ATMs with a view to increasing financial inclusion.
Certificates of authorisation have been issued to BTI Payments Pvt Ltd, Srei Infrastructure Finance Ltd, and RiddiSiddhi Bullions Ltd, RBI said in the release.
In June 2012, RBI had issued policy guidelines permitting non-bank entities to set up and operate WLAs in the country after seeking authorisation under the Payment and Settlement Systems Act, 2007.
Till then only banks were permitted to set up and operate ATMs in India. The primary objective of permitting non-banks to operate WLAs was to enhance the spread of ATMs in semi-urban and rural areas, mainly tier III to VI areas, where bank owned ATM penetration was not growing. Under the new guidelines, certain minimum number of WLAs need to be installed in these areas in three years as per the scheme opted by the respective operator. (KNN/SD)
Earlier, only deposit taking NBFCs were required to have the central bank’s prior approval.
"The prior written permission of the Reserve Bank of India shall be required for any takeover or acquisition of control of an NBFC, whether by acquisition of shares or otherwise," RBI said in a notification yesterday.
“The requirement is applicable to all NBFCs, irrespective of it being a deposit taking or a non-deposit taking NBFC,” RBI said.
The regulator also clarified RBI’s prior approval will not be required if a NBFC is acquiring less than 10 per cent of another entity.
The RBI said these directions shall come into force with immediate effect.
“Under Section 45 IA (4)(c) of the RBI Act, 1934, a certificate of Registration can only be given to a company if the Bank is satisfied, inter alia, that the general character of the management or the proposed management of the non-banking financial company shall not be prejudicial to the public interest or the interests of its depositors,” RBI said.
Meanwhile, Reserve Bank has authorised three non-banking entities for setting up white label ATMs with a view to increasing financial inclusion.
Certificates of authorisation have been issued to BTI Payments Pvt Ltd, Srei Infrastructure Finance Ltd, and RiddiSiddhi Bullions Ltd, RBI said in the release.
In June 2012, RBI had issued policy guidelines permitting non-bank entities to set up and operate WLAs in the country after seeking authorisation under the Payment and Settlement Systems Act, 2007.
Till then only banks were permitted to set up and operate ATMs in India. The primary objective of permitting non-banks to operate WLAs was to enhance the spread of ATMs in semi-urban and rural areas, mainly tier III to VI areas, where bank owned ATM penetration was not growing. Under the new guidelines, certain minimum number of WLAs need to be installed in these areas in three years as per the scheme opted by the respective operator. (KNN/SD)
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