NEW DELHI, May 30: The Union finance ministry has set July 8 as the deadline for the 30,000-odd non banking financial companies (NBFCs) to register themselves with the Reserve Bank of India (RBI).

Those who do not adhere to this deadline will be wound up, highly-placed finance ministry sources said today. The new registration framework has been put together by finance ministry officials in consultation with the RBI governor C Rangarajan. The latter has been summoned again to Delhi on Friday evening for urgent consultations on the CRB Caps fiasco.

All registered NBFCs will have to necessarily follow RBI guidelines on the interest rate structure. The nature and tenure of deposits will also be determined by the RBI. Books of accounts of NBFCs will be subject to regular RBI sponsored inspection. The companies will also have to obey guidelines that may be issued by the RBI from time to time.

Finance ministry sources said that the RBI will be empowered to issue directions to auditors to enforce income recognition norms on NBFCs.

The registration policy will bring to an end to the era of high interest rate offered by NBFCs and the so called "blade" companies, finance ministry sources said.

According to existing laws, the minimum net worth of an NBFC should be Rs 25 lakh and 20 per cent of its profits will have to be compulsorily deposited into a reserve fund to meet contingencies.

The ministry, however, ruled out the possibility of legitimising an insurance scheme for depositors along the lines available for those who invest money in banks.

"NBFC deposits are not comparable to bank deposits. The former essentially provide high interest rates and deposits of this nature can be termed as risk investments," the finance ministry official said. There will be no cover for unregistered NBFC depositors and will also not be entitled to an insurance net.

But given the peculiar circumstances and extent of the CRB Caps crisis, the ministry is of the view that ordinary depositors' investments (estimated at Rs 140 crore) should be given first charge by the official liquidators.

According to rough estimates available with the finance ministry, the total liability of CRB Caps has been placed at around Rs 800 crore after taking into account net owned funds of around Rs 420 crore.

The ministry is in favour of a Barings-ING-type solution for sustaining CRB Caps. But whether a buyer can be found or not will depend upon the extent of liability in comparison with the assets of the company. A takeover is possible only after the official liquidator does an inventory of the company's assets and liabilities. This is expected to take some time, sources pointed out.

The ministry is currently scrutinising status reports on the crisis sent by the RBI and SEBI. More details are pouring in every day. The full extent of the scam will only unfold over the next few weeks, the finance ministry official claimed. The ministry has still not initiated the exercise of fixing responsibility for the crisis but admitted that warning signals were available for quite some time. "Had these signals been handled differently, a crisis of this nature may not have occurred," the official said.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.