(LiveMint)
The Reserve Bank of India (RBI) has cancelled licences of 368 non-banking financial companies (NBFCs) in the six months ended June, more than double the number of such cancellations in the whole of 2017, for failing to meet regulatory norms. The move is being seen as an attempt to clean up the sector, which has more than 11,402 entities, of which 222 are non-deposit taking NBFCs. Industry experts say a majority of the licences belong to NBFCs, which had failed to meet RBI’s requirement of net owned fund of ₹ 2 crore. In fact, some NBFCs had surrendered their certificates of registration.
According to the amendment in the RBI Act of 1997, the central bank had mandated the minimum capital requirement for NBFCs at ₹ 25 lakh. The requirement was increased to ₹ 2 crore for new NBFCs. However, the old ones were allowed to continue with the earlier capital requirement until RBI issued a revised regulatory framework in 2014. Under this, it had set a deadline for all NBFCs to reach the minimum net owned fund of ₹2 crore before 31 March 2017.
“There are still a large number of NBFC that have not been able to reach that level, and RBI is cancelling their registrations. However this should not be seen as any risk to the sector,” said Raman Aggarwal, chairman, Finance Industry Development Council.
