What changed
RBI issued a master circular consolidating all prior instructions on CICs, including the August 2010 circular and January 2011 notifications, updated as of June 30, 2012. It clarified that investing in shares for holding stake is now considered NBFC business, removing earlier ambiguity. Systemically important CICs (asset size ≥₹100 crore) are brought under a regulatory framework similar to NBFCs-ND-SI.
What it means for you
CICs must now register with RBI and comply with capital adequacy, leverage, and reporting requirements, increasing compliance costs. Banks lending to CICs need to reassess credit risk as these entities are now formally regulated. The move aims to reduce systemic risk from CICs accessing public funds like bank borrowings and commercial paper.
What you must do
- Verify that all CIC borrowers have obtained RBI registration and submit annual statutory auditor certificates.
- Update internal credit policies to treat CICs as regulated NBFCs for exposure and risk assessment.
- Monitor CIC asset size and systemic importance status to ensure compliance with RBI reporting norms.
- Review existing loan covenants to align with CIC regulatory requirements under the master circular.
Who it affects
Core Investment Companies (CICs) with asset size ≥₹100 crore, Banks and financial institutions lending to CICs, RBI supervision and regulation departments
What is the asset threshold for a CIC to be considered systemically important?
A CIC with an asset size of ₹100 crore or more as per the last audited balance sheet is defined as systemically important, as per the circular.
Are CICs required to register with RBI under this master circular?
Yes, CICs meeting the criteria must obtain a Certificate of Registration from RBI under Section 45 IA of the RBI Act, 1934, as per the directions.
Does this circular change how CIC investments in shares are treated?
Yes, investing in shares for holding stake is now regarded as NBFC business, removing earlier ambiguity between holding and trading.