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Finance > Overview > Financial Institutions > Intermediary : Non-banking > NBFC review

Amendments to NBFC Regulations

In view of the fact that the mutual funds have the time tested appraisal techniques for assessment of the borrowers' capacity to repay the debts and they do not require the same degree of protection as needed by the depositors under the RBI Act, it has been decided to exempt the borrowings from mutual funds from the purview of public deposits. The NBFCs could reduce the amount of borrowings from mutual funds while computing the outstanding public deposits as on December 31, 1999 and maintain the liquid assets on and from April 1, 2000 on the remaining public deposit liabilities as per the extant provisions under Section 45-IB of the RBI Act, 1934.

NBFC should give at least 3 months public notice prior to the date of closure of any of its branches/ offices in, at least, one leading national news paper and a leading local (covering the place of branch / office) vernacular language newspaper indicating therein the purpose and arrangements being made to service the depositors etc.

(b) (i) To ensure that the new management follows the objectives and to keep the public informed of the change of management and control of NBFCs, it has been decided that a public notice of three months shall be given before effecting the sale of, or transfer of the ownership by sale of shares, or transfer of control, whether with or without sale of shares. Such public notice shall be given by the NBFC and also by the transferor, or the transferee
(ii) The public notice should indicate the intention to sell or transfer ownership / control, the particulars of transferee and the reasons for such sale or transfer of ownership / control. The notice should be published in one leading national and another in leading local (covering the place of registered office) vernacular language newspaper.
An intimation along with a copy of the notice in respect of items (a) and (b) above should be sent within 7 days of its publication in the newspapers to the Regional Office of RBI under whose jurisdiction the registered office of the company is located.

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