RBI aims to plug fissures allowing fund raising by NBFCs
By Neelima Shankar
Jan 4, 2011
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Banking and monetary regulator, Reserve Bank of India is moving towards filling the gaps which allow non banking finance companies (NBFCs) to raise funds through private placement. RBI is working together with the ministry of corporate affairs in this regard.

Provisions in Sec 67 of the Companies Act, 1956 said that if any company plans to issue equity or debt instruments (shares or debentures) to more than 49 investors then it has to do so through public issuance. The second financial stability report released by RBI however said that NBFCs have been given exemption from these provisions.

This infers that NBFCs especially the ones which are not under RBI regulation can raise funds by issuing debt or quasi debt instruments to investors, both retail and institutional through private placement.

This exemption thus allows them to raise deposits outside the regulatory framework.


(Comments Posted : 1) Post Your Comments
1. It does not mean that those NBFCs which are not under RBI regulations are able to raise funds outside regulatory framework.

RBI exempts only those nbfcs which are under direct supervision of RBI. It means that it covers those NBFCs which files returns, complies with reporting requirements, files auditor certificate and so and so forth.
rajesh (Posted: Jul 13, 2011)
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