What changed
RBI issued a revised Master Circular (No. 282) superseding the earlier one (No. 228), consolidating all current exemptions from Chapter III-B of the RBI Act, 1934 up to June 30, 2012. The circular lists exempted entities including housing finance institutions, merchant banking companies, micro finance companies, mutual benefit companies, and others like Nidhi and chit companies.
What it means for you
Banks and NBFCs must refer to this consolidated circular for clarity on which entities are exempt from registration, net owned fund, liquid asset, and reserve fund requirements. Lenders dealing with exempted categories like merchant bankers or micro finance companies need to verify compliance conditions (e.g., SEBI registration or Section 25 licensing) to avoid regulatory gaps.
What you must do
- Review the updated Master Circular to identify exempt NBFC categories relevant to your lending or investment portfolio.
- Ensure counterparties claiming exemptions meet specific conditions (e.g., SEBI registration for merchant bankers, Section 25 license for micro finance companies).
- Update internal compliance checklists to reflect the consolidated exemptions as of June 30, 2012.
- Monitor RBI website for future updates to this circular.
Who it affects
Non-Banking Financial Companies (NBFCs), Housing Finance Institutions, Merchant Banking Companies, Micro Finance Companies, Mutual Benefit Companies, Nidhi and Chit Companies, Banks lending to or investing in exempt NBFCs
Which NBFCs are exempt from RBI registration under this circular?
Entities like housing finance institutions, merchant banking companies (if SEBI-registered and meeting conditions), micro finance companies (licensed under Section 25 of the Companies Act, 1956, with credit not exceeding Rs 50,000 for a business enterprise and Rs 1,25,000 for meeting the cost of a dwelling unit), mutual benefit companies (with net owned funds and preferential share capital of not less than ten lakhs of rupees and applied for registration by 9 July 1997), and others like Nidhi and chit companies are exempt from Sections 45-IA, 45-IB, and 45-IC of the RBI Act.