If unregistered CICs with asset size above Rs100 crore access public funds without obtaining a Certificate of Registration from the RBI, they will be seen as violating Core Investment Companies (Reserve Bank) Directions, 2011 dated 5 January 2011, the apex bank said
Mumbai: To protect depositors, the Reserve Bank of India (RBI) on Friday asked unregistered core investment companies (CICs) to stop accepting public deposits, reports PTI.
CICs are non-banking finance companies (NBFCs) which invest in shares for the purpose of owning a stake in a company, rather than for trading. They also do not carry out any other financial activities.
“The RBI having considered it necessary in the public interest and being satisfied that for the purpose of enabling the bank to regulate the credit system to the advantage of the country, it is necessary to amend the Core Investment Companies (Reserve Bank) Directions...”
“Every CIC exempted from registration requirement with RBI shall pass a board resolution that it will not, in the future, access public funds,” RBI said in a notification.
If unregistered CICs with asset size above Rs100 crore access public funds without obtaining a Certificate of Registration (CoR) from the RBI, they will be seen as violating Core Investment Companies (Reserve Bank) Directions, 2011 dated 5 January 2011, the apex bank said.
However, the RBI made it clear that CICs could issue guarantees or take on other contingent liabilities on behalf of their group entities.
“Before doing so, all CICs must ensure that they can meet the obligation thereunder, as and when they arise. In particular, CICs which are exempt from registration requirement must be in a position to do so without recourse to public funds in the event the liability devolves, else they shall approach RBI for registration before accessing public funds,” it said.
The RBI defined “public funds” as those funds raised either directly or indirectly through public deposits, commercial papers, debentures, inter-corporate deposits and bank finance but excludes funds raised by issue of instruments which are compulsorily convertible into equity shares within a period not exceeding 10 years from the date of issue.
In 2010, the RBI had directed Core Investment Companies (CICs) to register themselves with RBI in case their asset size is at least Rs100 crore..
“We expect some bottoming out of this process (slowdown) over the course of the year,” RBI deputy governor Subir Gokarn said, adding that a number of other data is also showing signs of slowdown in manufacturing
Bangalore: Unfazed by 3.5% decline in industrial output in March, the Reserve Bank of India on Friday exuded confidence that the current fiscal will witness mild recovery in the economic growth, reports PTI.
“Our outlook for the year 2012-13 is for a mild recovery in growth,” RBI deputy governor Subir Gokarn said at a CII event here.
The RBI in its annual monetary policy statement had projected an economic growth of 7.5% in the current fiscal. This would be higher than 6.9% estimated in 2011-12 fiscal.
Reflecting investment deficit, industrial production fell 3.5% in March, for the first time in five months. The factory output, as measured by the Index of Industrial Production (IIP) for March, 2012, compares with an impressive 9.4% growth a year ago.
“We expect some bottoming out of this process (slowdown) over the course of the year,” Mr Gokarn said, adding that a number of other data is also showing signs of slowdown in manufacturing.
The manufacturing segment which accounts for 75% of the IIP, contracted by 4.4% on slackening exports and poor demand resulting from high interest cost of raw material and borrowing. The sector had shown an 11% growth a year ago.
“We have to live with the possibility that global slowdown determined by the oil prices, capital flows and demand conditions will remain challenging for time to come.
However, the good news is domestic growth is balancing and stabilising,” he said.
Mr Gokarn further said that the rising oil prices is a cause of concern and measures should be taken to reduce subsidies.
Crude oil prices have been rising due to geo-political reasons, including the Iran situation. The prices had touched a high of $125 a barrel in March although it has receded around $113 a barrel now. India imports about 80% of its crude oil requirements.
Expressing concern about food inflation, especially the price rise in protein-based items which is “showing signs of rising”, Mr Gokarn said it was important to step up supply of these items.
He said that whether RBI will lower rates in its 18th June policy review would depend on the growth-inflation balance.
To a query on whether the volatility of rupee would continue, Mr Gokarn said: “We are trying to curb it and we are using the instruments that we think are appropriate in any given situation to curb it and we will continue to do that”.
The rupee on Friday fell by 21 paise to close at Rs 53.63 against dollar. This is the sixth straight week of loss for the domestic currency.
To ensure more availability of dollars, the RBI had on Thursday asked exporters to sell 50% of their foreign exchange holdings.
According to the Trinamool Congress chief one political party, in its meeting deliberated on advancing the Lok Sabha election to 2013
Kolkata: Trinamool Congress supremo Mamata Banerjee on Friday claimed she has information that a polical party in Delhi had held a meeting to advance the Lok Sabha poll to 2013 and asked her partymen to be ready for it, reports PTI.
"Anyday, we can face election. We have to remain ready. One party has held a meeting to hold the election in advance, though my information may not be correct," Ms Banerjee told a meeting of Trinamool Congress without naming the party.
"I have got the information. I am not going into details as to who were at the meeting. They deliberated on advancing the Lok Sabha election to 2013," she said.
Mr Banerjee turned to her close aide and Railway Minister and said "what Mukul? Wasn't the the meeting held?
Subrata Baksi, MP, was re-elected as the state president of Trinamool Congress at the meeting.
Asking her partymen to behave, she said "we are in the government. We should not do anything so that people misunderstand us."
Warning her partymen not to indulge in groupism, she said if any MLA or MP does not take care of the people "we do not require them."