2. While the Master Circular
has been prepared to enable the users to have the benefit of a consolidated
circular, for the purpose of operations, they should refer to the instructions/directions
contained in the relevant notification. A list of Notifications on which this
Master Circular is based is given at the end of the Master Circular.
Yours faithfully,
Sd/-
(D. S. Nagi)
Chief General Manager
1. Introduction
The Bank has issued notifications
from time to time exempting some entities from the requirements of Chapter III
B of the RBI Act, 1934 or part thereof. A Master Circular on the basis of notifications
issued upto June 30, 2005 has been prepared.
While the Master circular has been
prepared to enable the users to have the benefit of a consolidated circular,
for the purpose of operations, they should refer to the instructions/directions
contained in the relevant notification. The Master Circular is based on notifications
listed in the Annexure.
2 (i) Exemption from provisions
of Chapter III B of the RBI Act, 1934 – Housing Finance Institutions.
The Bank has exempted a non-banking
financial company which is a housing finance institution as defined in Section
2(d) of the National Housing Bank Act, 1987 from the provisions of Chapter III
B of the RBI Act, 1934.
2(ii) Merchant Banking company
:
A merchant banking company has
been exempted from the provisions of Section 45-IA [Requirement of registration
and net owned fund], Section 45-IB [Maintenance of liquid assets] and 45-IC
[Creation of Reserve Fund] of the RBI Act, 1934 , Non-Banking Financial Companies
Acceptance of Public Deposits (Reserve Bank) Directions, 1998 and Non-Banking
Financial Companies Prudential Norms (Reserve Bank) Directions, 1998 subject
to compliance with the following conditions:
a. It is registered with the
Securities and Exchange Board of India as a Merchant Banker under Section
12 of the Securities and Exchange Board of India Act, 1992 and is carrying
on the business of merchant Banker in accordance with the Securities and
Exchange Board of India Merchant Banking (Rules) 1992 and Securities and
Exchange Board of India Merchant Banking (Regulations) 1992;
b. acquires securities only
as a part of its merchant banking business;
c. does not carry on any other
financial activity referred to in Section 45I(c) of the RBI Act, 1934; and
d. does not accept or hold
public deposits as defined in paragraph 2(1)(xii) of the Notification No.
DFC 118/DG(SPT)-98 dated January 31, 1998.
2 (iii) Micro Finance Companies
Sections 45IA, 45IB and 45IC of
the Reserve Bank of India Act, 1934 (2 of 1934) shall not apply to any non-banking
financial company
(a) engaged in micro financing
activities, providing credit not exceeding Rs. 50,000 for a business enterprise
and Rs. 1,25,000 for meeting the cost of a dwelling unit to any poor person
for enabling him to raise his level of income and standard of living; and
(b) licensed under Section
25 of the Companies Act, 1956; and
(c) not accepting public deposits
as defined in paragraph 2(1)(xii) of Notification No. 118 /DG(SPT)-98 dated
January 31, 1998.
Mutual Benefit Companies
being a mutual benefit company
as defined in paragraph 2(1) (ixa) of the Non-Banking Financial Companies Acceptance
of Public Deposits (Reserve Bank) Directions, 1998 contained in Notification
No. DFC.118/DG(SPT)-98 dated January 31, 1998). A "mutual benefit
company" means a company not notified under section 620A of the Companies
Act, 1956 (1 of 1956) and carrying on the business of a non-banking financial
institution, -
- on 9th January 1997; and
- having the aggregate of net owned funds and
preferential share capital of not less than ten lakhs of rupees; and
- has applied for issue of certificate of registration
to the Bank on or before 9th July 1997; and
- is complying with the requirements contained
in the relevant provisions of the Directions issued under Section 637A of
the Companies Act, 1956 to Nidhi Companies by the Central Government.
2(iv) Government Companies
Sections 45IB and 45IC of the Reserve
Bank of India Act, 1934 (2 of 1934), shall not apply to any non-banking financial
company as defined in section 45-I(f) of the Reserve Bank of India Act, 1934
(2 of 1934) being a Government company as defined in section 617
of the Companies Act, 1956. A Government Company is a company in which not less
than 51% of the paid up capital is held by the Central Government, or by any
State Government or Governments or partly by the Central Government and partly
by one or more State Governments and includes a company which is subsidiary
of a Government Company as thus defined.
2(v) Venture Capital
Fund Companies
Section 45-IA and Section 45-IC
of the Reserve Bank of India Act, 1934 (2 of 1934); Notification No. DFC.118/DG(SPT)-98
dated January 31, 1998; and Notification No. DFC.119 / DG(SPT)-98 dated January
31, 1998 shall not apply to a non-banking financial company, which is a venture
capital fund company holding a certificate of registration obtained under Section
12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) and
not holding or accepting public deposit as defined in paragraph 2(1)(xii) of
the Notification No. DFC.118/DG(SPT)-98 dated January 31, 1998.
2(vi) Insurance/Stock
Exchange/Stock Broker/Sub-Broker
The provisions of Section 45-IA,
45-IB, 45-IC, 45MB and 45MC of the Reserve Bank of India Act, 1934 (2 of 1934)
and provisions of Non-Banking Financial Companies Acceptance of Public Deposit
(Reserve Bank) Directions contained in Notification No. DFC.118 / DG(SPT)-98
dated January 31. 1998, the Non-Banking Financial Companies Prudential Norms
(Reserve Bank) Directions, 1998 contained in Notification No. DFC. 119/DG(SPT)-98
dated January 31, 1998 shall not apply to any non-banking financial company
not holding or accepting public deposit as defined in paragraph 2(1)(xii) of
the Notification No. DFC.118/DG(SPT)-98 dated January 31, 1998, and -
(a) doing the business of insurance,
holding a valid certificate of registration issued under Section 3 of the Insurance
Act, 1938 (IV of 1938);
(b) being a stock exchange,
recognised under Section 4 of the Securities Contracts (Regulation) Act,
1956 (42 of 1956) ; and
(c) doing the business of
a stock-broker or sub-broker holding a valid certificate of registration
obtained under Section 12 of the Securities and Exchange Board of India
Act, 1992 (15 of 1992)
2(vii) Nidhi Companies
The provisions of Sections 45-IA,
45-IB and 45-IC of the Reserve Bank of India Act, 1934 (2 of 1934) shall
not apply to any non-banking financial company
(a) Notified under Section
620A of the Companies Act, 1956 (1 of 1956), known as Nidhi Companies;
and
Chit Companies
(b) doing the business of
chits, as defined in clause (b) of Section 2 of the Chit Funds Act,
1982 (No. 40 of 1982).
Annexure