What changed
RBI released a consolidated notification of the Miscellaneous Non-Banking Companies (Reserve Bank) Directions, 1977, as amended up to June 30, 2011. This supersedes the earlier Directions contained in Notification No. DNBC.21/DG(S)-73 dated August 23, 1973. The updated text is now available on the RBI website.
What it means for you
For banks and lenders, this means that miscellaneous non-banking companies (MNBCs) operating prize-linked savings or chit-like schemes must comply with the consolidated 1977 directions. Banks dealing with such entities should verify their adherence to these rules, especially regarding fund collection and prize distribution. Non-compliance could expose banks to regulatory risks.
What you must do
- Review the updated 1977 Directions on RBI's website to understand the full scope of activities covered.
- Ensure any MNBC you lend to or partner with complies with these directions, particularly on fund utilisation and prize schemes.
- Update internal compliance checklists to include references to the consolidated 1977 Directions for MNBCs.
- Train relevant staff on the applicability of these directions, especially for entities operating in Jammu and Kashmir.
Who it affects
Miscellaneous non-banking companies (MNBCs) as defined in the directions, Banks and lenders dealing with MNBCs, Regulatory compliance teams in banks, NBFCs with similar business models
What is the scope of these directions?
They apply to financial institutions that are companies. Sub-paragraph (1) applies to any place in the State of Jammu and Kashmir for collecting monies via subscriptions for prize-linked savings schemes. Sub-paragraphs (2) to (4) apply to any place in India for managing chit or kuri schemes or similar business.
Do these directions replace earlier rules?
Yes, they supersede the earlier Directions contained in Notification No. DNBC.21/DG(S)-73 dated August 23, 1973, as amended.
Where can I find the full updated text?
The updated notification is available on the RBI website at http://www.rbi.org.in.