The government may extend the special dispensation available for RBI-registered non-banking finance companies (NBFCs) to finance companies registered with International Financial Services Centres Authority (IFSCA). Firms at the GIFT city in Gujarat will be among the key beneficiaries of the move. Inter-corporate borrowings by GIFT City firms may become easier.
The ministry of corporate affairs (MCA) is planning to amend the relevant rules for this purpose, and has sought comments in this regard till July 17.
As per the Companies Act and Rule 11(2) of the Companies (Meetings of Board and its Powers) Rules, 2014, the NBFCs registered with the RBI and engaged in the business of giving loans or providing guarantee for due repayment of loan are exempt from the requirements of section 186 (except sub-section 1) of the Act.
The Section 186 of the Companies Act, 2013 governs loans, guarantees, and investments made by companies. It sets the limit for inter-corporate borrowing and lending.
The IFSCA is a statutory authority which was set up to develop and regulate the financial products, financial services, and financial institutions in the International Financial Services Centres such as GIFT IFSC.
In a notification, MCA said that it has examined the proposal of IFSCA after consulting with the department of economic affairs, RBI and IFSCA, and proposed to amend the Companies (Meetings of Board and its Powers) Rules, 2014.