What changed
This is a master circular that consolidates and updates the original 1977 Directions (Notification No. DNBC.39/DG(H)-77) as of June 30, 2007, superseding the earlier 1973 Directions. It does not introduce new rules but provides a single reference document for all MNBCs on deposit acceptance.
What it means for you
For banks and lenders, this circular reaffirms the regulatory framework for MNBCs, which are non-banking entities that collect public deposits through schemes like prize-linked savings or chit funds. Banks must ensure that any dealings with such companies comply with these deposit-taking restrictions to avoid regulatory risks.
What you must do
- Verify that any MNBC you deal with adheres to the 1977 Directions on deposit acceptance limits and purposes.
- Review your exposure to MNBCs to ensure they are not violating deposit norms, which could impact their repayment capacity.
- Stay updated on any subsequent amendments to these Directions, as this master circular is a consolidation as of June 30, 2007.
Who it affects
Miscellaneous Non-Banking Companies (MNBCs) operating prize-linked savings or chit fund schemes, Banks and financial institutions with exposure to MNBCs, Regulatory compliance teams at NBFCs
What types of companies are covered under these Directions?
These Directions apply to financial institutions that are companies and carry on business like collecting money through subscriptions or contributions for prize-linked savings schemes, or managing chit fund-type arrangements where subscribers get a prize amount by lot or auction.
Does this master circular change any existing rules for MNBCs?
No, it consolidates the existing 1977 Directions as of June 30, 2007, without introducing new requirements. It replaces the earlier 1973 Directions and serves as a single reference document.
What should banks check when dealing with an MNBC?
Banks should ensure the MNBC complies with the deposit acceptance norms under these Directions, including limits on public deposits and proper utilisation of collected funds, to avoid regulatory or credit risks.