nbfcs - certain issues and developments
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NBFCs - Certain Issues and developments. JB Nagar CPE Study Circle WIRC, ICAI CA Jayant Thakur 8th September 2013,. Outline of law. Act Various Directions, Circulars, etc. Acceptance of deposits Prudential Norms Auditors Others Recent Reports/draft Guidelines State Laws - PowerPoint PPT PresentationTRANSCRIPT
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NBFCs NBFCs - Certain Issues and - Certain Issues and
developmentsdevelopments
JB Nagar CPE Study CircleWIRC, ICAI
CA Jayant Thakur8th September 2013,
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Outline of law ActVarious Directions, Circulars, etc.
◦Acceptance of deposits◦Prudential Norms ◦Auditors ◦Others
Recent Reports/draft Guidelines State LawsCompanies Act, 2012/SEBI
Ordinance CA Jayant Thakur, 8th September 2013 2
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Position as on 31Position as on 31stst March March 20102010Total NBFCs 12662 Deposit taking NBFCs 311SI-ND taking NBFCs 295Other ND taking NBFCs – 12056Asset size of non-deposit
accepting NBFCs grew from 250765 crores in 2006 to 566853 crores.
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Auditors role General and comprehensiveRegistrationCompliance of Prudential Norms
and Deposits DirectionsContinuity of businessManner of reporting Miscellaneous
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Important basic terms Definition of NBFC
◦What constitutes NBFC◦50% criteria
Financial assets
Exempted companiesNet owned fundsPunishment for violation
◦Non-compoundableNon-appealable
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Core Investment Companies Core Investment Companies (CICs)(CICs)Definition and concepts
◦Basic conditions SI ND Assets composition Public Funds Group
BenefitsObligations
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Mergers/takeovers of NBFCs Deposit AcceptingOthersProposed changes
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Thorat Committee ReportOverviewPublic funds conceptNBFCs < Rs. 50 crores assets
◦Principal business conditionNBFCs < Rs. 1000 crores assets
◦Principal business condition Existing NBFCs?
◦De-registration◦Re-registration/gestation period
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Thorat Committee ReportChange of control/mergersReduction in deposit limits for
AFCsNo new deposit accepting NBFCsAll deposit accepting NBFCs to
get ratedMultiple NBFCsCaptive NBFCs
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Thorat Committee ReportCorporate governance
◦More powers for RBI ◦Clause 49
Mandatory disclosures
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Recent letters to “NBFCs”Recent letters to “NBFCs”Issues raisedOther NBFCs
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Debentures Private placement guidelines NBFCs raised 3,18,800 crores in
2011-12◦ND-SI 2,95,000 crores
Recent controversies and abusesApplies to private placements
◦NCDsTime of completion - 6 monthsGaps between 2 placementsNames of subscribers
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Debentures Private placement guidelines Maximum number of investors 49Minimum amounts/multiples Only secured
debentures/compulsorily convertible debentures
Applicability - “as may be specified”
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Companies Act, 2012 – some pointers Frauds in deposit acceptanceFrauds generallyClass actionsSahara/Saradha type of cases
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Securities Laws Ordinance 2013 Arrangements/pooling with
corpus of more than Rs. 100 crores
NBFCs?
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State Depositors’ Protection State Depositors’ Protection LawsLawsWhich States?Who are covered? What is deposits?When would there be violation?What action can be taken?Supreme Court – K. K. Baskaran,
4th April 2011Applicable to NBFCs?
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