Registration of 1,604 NBFCs cancelled

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Published: August 30, 2019 2:58:18 AM

The mandate to maintain financial stability is ensured through close supervision of systemically important NBFCs; those with asset size of Rs 500 crore and above.

NBFC, NBFC Registration cancelled, cyber security, NBFC sector, RBIThe Enforcement Department now decides monetary penalties in respect of NBFCs.

The certificates of registration of 1,604 non-banking financial companies (NBFCs) were cancelled in 2018-19 for non-fulfilment of the minimum net owned fund requirement criterion of Rs 2 crore, as part of efforts to weed out non-compliant weak NBFCs.

The mandate to maintain financial stability is ensured through close supervision of systemically important NBFCs; those with asset size of Rs 500 crore and above. They are currently 276 in number and account for 85% of the asset size of the sector, the central bank report said.

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All four pillars of supervision — on-site examination, off-site surveillance, market intelligence and annual certificate received from statutory auditors — are used for monitoring NBFCs, the RBI mentioned. Smaller NBFCs are monitored through off-site surveillance, market intelligence and on-site scrutiny visits. From October 2018, the imposition of monetary penalty has been separated from the supervisory function with a view to ensuring independent and neutral assessment. The Enforcement Department now decides monetary penalties in respect of NBFCs.

As part of the ‘ownership-neutrality’ principle, adopted for supervision of NBFCs, all government-owned NBFCs, accounting for 30% of assets of the sector, and government-owned deposit taking NBFCs, which account for 1.4% of assets of the sector, have been brought under RBI’s on-site inspection framework and off-site surveillance from the inspection cycle 2018-19.

All NBFCs including fintech-based P2P NBFCs are also being brought under off-site reporting through the XBRL platform. In the context of electronic transactions and their surveillance, monitoring of cyber security-related incidents in the NBFC sector has gained traction.

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