Transcript NBFCs-Certain-Issues-Developments-CA-Jayant-Thakur-8th

NBFCs
- Certain Issues and developments
JB Nagar CPE Study Circle
WIRC, ICAI
CA Jayant Thakur
8th September 2013,
Outline of law
Act
 Various Directions, Circulars, etc.
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Acceptance of deposits
Prudential Norms
Auditors
Others
Recent Reports/draft Guidelines
 State Laws
 Companies Act, 2012/SEBI Ordinance
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Position as on 31st March 2010
Total NBFCs 12662
 Deposit taking NBFCs 311
 SI-ND taking NBFCs 295
 Other ND taking NBFCs – 12056
 Asset size of non-deposit accepting
NBFCs grew from 250765 crores in 2006
to 566853 crores.
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Auditors role
General and comprehensive
 Registration
 Compliance of Prudential Norms and
Deposits Directions
 Continuity of business
 Manner of reporting
 Miscellaneous
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Important basic terms
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Definition of NBFC
◦ What constitutes NBFC
◦ 50% criteria
 Financial assets
Exempted companies
 Net owned funds
 Punishment for violation
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◦ Non-compoundable
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Non-appealable
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Core Investment Companies (CICs)
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Definition and concepts
◦ Basic conditions
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SI
ND
Assets composition
Public Funds
Group
Benefits
 Obligations
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Mergers/takeovers of NBFCs
Deposit Accepting
 Others
 Proposed changes
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Thorat Committee Report
Overview
 Public funds concept
 NBFCs < Rs. 50 crores assets
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◦ Principal business condition
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NBFCs < Rs. 1000 crores assets
◦ Principal business condition
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Existing NBFCs?
◦ De-registration
◦ Re-registration/gestation period
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Thorat Committee Report
Change of control/mergers
 Reduction in deposit limits for AFCs
 No new deposit accepting NBFCs
 All deposit accepting NBFCs to get rated
 Multiple NBFCs
 Captive NBFCs
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Thorat Committee Report
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Corporate governance
◦ More powers for RBI
◦ Clause 49
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Mandatory disclosures
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Recent letters to “NBFCs”
Issues raised
 Other NBFCs
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Debentures Private placement
guidelines
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NBFCs raised 3,18,800 crores in 2011-12
◦ ND-SI 2,95,000 crores
Recent controversies and abuses
 Applies to private placements
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◦ NCDs
Time of completion - 6 months
 Gaps between 2 placements
 Names of subscribers
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Debentures Private placement
guidelines
Maximum number of investors 49
 Minimum amounts/multiples
 Only secured debentures/compulsorily
convertible debentures
 Applicability - “as may be specified”
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Companies Act, 2012 – some
pointers
Frauds in deposit acceptance
 Frauds generally
 Class actions
 Sahara/Saradha type of cases
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Securities Laws Ordinance 2013
Arrangements/pooling with corpus of
more than Rs. 100 crores
 NBFCs?
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State Depositors’ Protection Laws
Which States?
 Who are covered?
 What is deposits?
 When would there be violation?
 What action can be taken?
 Supreme Court – K. K. Baskaran, 4th April
2011
 Applicable to NBFCs?
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THANK YOU!