What changed
RBI released an updated notification consolidating all amendments to the NBFC Public Deposit Directions 1998 as of June 30, 2011. The earlier directions from January 2, 1998, are superseded. Key definitions for Asset Finance Company, free reserves, insurance company, investment company, lending public financial institution, and loan company are included.
What it means for you
NBFCs must now refer to this consolidated circular for compliance on public deposit acceptance. The updated definitions clarify which entities qualify as Asset Finance Companies and loan companies, impacting deposit-taking eligibility. Banks lending to NBFCs should verify that their NBFC counterparties adhere to these updated norms.
What you must do
- Review the updated NBFC Public Deposit Directions 1998 for changes in definitions and deposit acceptance rules.
- Ensure your NBFC clients or your own NBFC operations comply with the consolidated circular as of June 30, 2011.
- Update internal compliance manuals and training materials to reference this circular instead of earlier versions.
Who it affects
All Non-Banking Financial Companies (except Residuary and Miscellaneous NBFCs), Banks lending to or dealing with NBFCs, Compliance and legal teams at NBFCs and banks
Does this circular change the deposit acceptance rules for NBFCs?
No, it consolidates existing rules as of June 30, 2011, without introducing new requirements. It supersedes the earlier January 2, 1998 directions.
Which NBFCs are excluded from this circular?
Residuary Non-Banking Companies and Miscellaneous Non-Banking Companies are excluded from the scope of this circular.
What is the definition of an Asset Finance Company under this circular?
An Asset Finance Company is a financial institution whose principal business is financing physical assets supporting productive or economic activity, such as automobiles, tractors, generator sets, and industrial machinery.