RBI makes Rs 200 lakh NOF mandatory for NBFCs

Mumbai, May 21 (UNI) The Reserve Bank of India (RBI) today said non-banking financial companies (NBFC) operating in the country will not be allowed to accept deposits unless they maintain a net owned fund (NOF) of Rs 200 lakhs.

NBFCs have also been asked to attain the enhanced NOF within a period of two years, failing which the institutions will be barred from accepting deposits and will have to refund the existing deposits to customers within three years in such a case.

RBI had first issued guidlines to raise the capital from the earlier Rs 25 lakh to Rs 200 lakh in the year 1999 and had made it mandatory for NBFCs to create a reserve fund, of which a sum of not less than 20 per cent of its net profit should be transferred every year.

The Central Bank today issued the draft circular as a review of the earlier guidelines and has invited comments from NBFCs about the proposal.

RBI, in an earlier directive had also directed NBFCs to obtain a certificate of registration (CoR) before accepting deposits from customers.

The Central Bank said that the request for CoR would be entertained from the non-banking institutions only after maintaining a track record of two years.

''The requirement to transfer a minimum 20 per cent of the published profit to reserve fund in terms of the requirement will give intrinsic strength to balance sheets of companies and will be treated as 'free reserve' for the purpose of calculation of NOF.

This would facilitate the NBFCs existing before on April 21, 1999 to comply with the minimum NOF requirement of Rs 200 lakh,'' the circular added.

UNI