What changed
RBI issued a master circular consolidating all existing instructions on CICs as of June 30, 2013. It clarified that investing in shares for holding stake is now considered 'business of acquisition of shares' under Section 45I(c)(ii) of the RBI Act, removing earlier ambiguity. The circular also reiterated the differential regulatory treatment for CICs versus other NBFCs-ND-SI.
What it means for you
CICs that meet the 90% asset threshold and do not trade in shares or accept public deposits get a lighter regulatory touch, but they are still NBFCs and must register if systemically important (assets ≥ ₹100 crore). Banks lending to CICs should verify their registration status and compliance with capital adequacy and leverage norms to avoid concentration risk. The circular also requires annual statutory auditor certificates, adding an extra compliance layer.
What you must do
- Verify that your CIC borrowers are registered with RBI if their asset size is ₹100 crore or more.
- Ensure CIC borrowers submit annual statutory auditor certificates confirming compliance with the 90% asset and other criteria.
- Review your exposure to CICs against the prescribed leverage and capital adequacy norms to manage systemic risk.
- Update internal credit policies to reflect the lighter regulatory framework for CICs but maintain due diligence on their group holding structure.
Who it affects
Core Investment Companies (CICs) and their group entities, Banks and financial institutions lending to CICs, NBFCs-ND-SI with asset size ≥ ₹100 crore, Statutory auditors of CICs
What is the key criterion for a company to be treated as a Core Investment Company (CIC)?
A CIC must have at least 90% of its assets in investments in shares for holding stake in group companies, not trade in those shares except for block sales, not carry on any other financial activity, and not hold or accept public deposits.
Do all CICs need to register with RBI?
No, only systemically important CICs with an asset size of ₹100 crore or more as per the last audited balance sheet need to register and comply with the regulatory framework. Smaller CICs are exempt from registration but must still meet the CIC criteria.
What are the main compliance requirements for a systemically important CIC?
They must register with RBI, maintain minimum capital adequacy, adhere to leverage limits, submit annual statutory auditor certificates, and follow reporting norms as per the Master Circular.