RBI cancels certificate of 36 NBFCs; 100+ NBFCs shut down in last three weeks

Mumbai, Aug 3 (KNN) The Reserve Bank of India (RBI) on Thursday cancelled certificates of as many as 36 Non-Banking Financial Companies (NBFCs). In the last one month certificates of more than 100 NBFCs have been cancelled.

Out of the 36 NBFCs whose registrations were cancelled yesterday, 34 are from Chandigarh and Punjab, and the other two are from Odisha and Andhra Pradesh.

RBI said, “These companies shall not transact the business of a Non-Banking Financial Institution, as defined in clause (a) of Section 45-I of the RBI Act, 1934.”

According to report by ICRA, under the PMLA, the NBFCs, which include cooperative banks, are required to furnish details about the identity of their clients, maintain records and furnish the information to the Financial Intelligence Unit.  Several NBFCs are facing closure for violation of these rules, but despite that these non-banking financial institutions are expected to grow at 19-21 per cent in the current financial year, while SME credit could see over 25 per cent growth.

On August 1, 2018, RBI has asked banks to consider associating with large non-banking finance companies to provide priority sector loans. As part of its statement on developmental and regulatory policies released on Wednesday, the banking regulator said that banks may tie up with non-deposit taking systemically important NBFCs for such loans.

In its statement, the regulator pointed out that both lenders will have to participate in providing the credit facilities to the borrowers.

The agreement between both lenders should also involve sharing of risks and rewards to ensure that both parties have ‘skin-in-the-game,’ RBI had said.