RBI proposes stricter norms for deposit-accepting NBFCs

Updated on May 21, 2007 11:48 PM IST
RBI on Monday proposed to bar the Non-Banking Finance Companies (NBFCs) with net owned fund (NOF) of less than Rs two crore from accepting deposits from public.
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PTI | By, Mumbai

Seeking to impose financial discipline, Reserve Bank on Monday proposed to bar the Non-Banking Finance Companies (NBFCs) with net owned fund (NOF) of less than Rs two crore from accepting deposits from public.

"No deposit-taking NBFC will be permitted to accept deposit, if its NOF is less than Rs 2 crore", RBI said in a draft circular, posted on its website for public comments.

The central bank also proposes to give two year time to existing deposit accepting NBFCs to increase their NOF to a minimum of Rs two crore.

The draft circular also stipulates that NBFCs that fail to meet the revised NOF norms even after the transition period of two years will be automatically converted into non-deposit taking category and will be required to repay the deposits held by them within three years.

The central bank had in 1999 raised the minimum NOF limit from Rs 25 lakh to Rs 2 crore for new companies seeking certificate of registration (CoR) as NBFC.

NBFCs and stakeholders can send their comments and feedback to the RBI's draft circular by June 7.

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