What changed
The notification amends the 1998 Directions by deleting previous clauses (i) and (ii) and substituting clause (iii) to set a 15% investment requirement from February 13, 2009. It adds provisos allowing NBFCs to invest up to 10% of public deposits in approved securities and the remainder in term deposits or bonds of scheduled commercial banks, SIDBI, or NABARD, with a total of at least 15% in public deposits.
What it means for you
NBFCs accepting public deposits must now ensure that at least 15% of public deposits are invested in unencumbered approved securities, term deposits, or bonds, with new options including SIDBI and NABARD instruments. Compliance with these specific investment norms is required to meet Section 45-IB.
What you must do
- Review current investments to ensure at least 15% of public deposits are in unencumbered approved securities, term deposits, or bonds as per amended rules.
- Consider investing up to 10% in approved securities and the remainder in term deposits or bonds of scheduled commercial banks, SIDBI, or NABARD.
- Update internal processes to reflect new investment options (SIDBI/NABARD) for meeting Section 45-IB requirements.
- Ensure compliance with the amended Directions from February 13, 2009.
Who it affects
All Non-Banking Financial Companies (NBFCs) accepting public deposits (excluding RNBCs)
Does this circular introduce new regulations for NBFCs?
No, it reinforces existing prudential norms and reporting requirements without adding new rules.
What are the key compliance areas highlighted?
Capital adequacy, asset classification, provisioning, and timely submission of returns are the main focus areas.
Who should take action on this circular?
Chairmen, CEOs, and compliance teams of all NBFCs must ensure adherence to the outlined norms.