Mergers and acquisitions (M&A) in the finance sector are controlled and regulated by the Reserve Bank of India (RBI). The RBI has over a period of time laid down the law by the virtue of which the establishment, functions and investments in non-banking finance companies (NBFCs) are managed in the country.
No NBFC can do business without obtaining a certificate of registration from the RBI. It should be a company registered under the Companies Act, 1956/2013, and must have a net owned fund (NOF) of not less than ₹20 million (US$300,000 – prior to April 1999, ₹2.5 million). However, there are categories of NBFCs that have been exempted from the requirement of registration with the RBI, as they are regulated by other regulators.
Systematically important non-deposit taking NBFCs do not accept or hold public deposits and their asset size is of ₹5 billion or more as per last audited balance sheet. Any activity of such NBFCs is likely to have an impact on the economy of the country, hence the classification.
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RAVI SINGHANIA is the managing partner and ARJUN ANAND is a partner at Singhania & Partners in New Delhi
Singhania & Partners Solicitors and Advocates
P-24, Green Park Extension
Website www.singhania.in / www.singhania.cn
Phone: +91-11-4747 1414