What changed
RBI issued a clarification to Circular No. 65 dated March 31, 2006, on maintenance of directed investments by RNBCs. The words 'i.e. incremental ALD' in paragraph 5(c) of that circular were omitted to avoid ambiguity.
What it means for you
RNBCs must now interpret the directed investment requirement as applying to the entire amount, not just the incremental portion. This removes potential confusion and ensures compliance with the original intent of the regulation.
What you must do
- Update internal compliance manuals to reflect the removal of 'incremental ALD' from paragraph 5(c).
- Review current directed investment portfolios to ensure they meet the corrected requirement.
- Communicate this clarification to relevant compliance and investment teams.
- Monitor future RBI circulars for any further clarifications on RNBC directed investments.
Who it affects
Residuary Non-Banking Companies (RNBCs), Compliance officers at RNBCs, Auditors reviewing RNBC directed investments
What does the removal of 'incremental ALD' mean for RNBCs?
It means the directed investment requirement applies to the total amount of such investments, not just the incremental additions made after a certain date.
Is this clarification retroactive?
The circular does not specify retroactive application, but RNBCs should ensure current compliance aligns with the corrected wording.
Which circular does this clarification amend?
It amends Circular No. DNBS (PD) CC.No.65/04.18.001/2005-06 dated March 31, 2006.