RBI for compulsory registration of CICs

Published on May 12, 2012 under Business, News

Mumbai(PTI): They will need prior approval from the Department of Non-Banking Supervision of the apex bank

The Reserve Bank proposed compulsory registration of Core Investment Companies (CICs) wanting to invest in overseas financial sector.

“CICs that are presently exempted from the regulatory framework of RBI, would be required to be registered with the Bank, for the purpose of overseas investment in financial sector,” RBI said in a draft guideline.

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 has invited stakeholders comment on the draft guideline by May 31, 2012. It further said that the aggregate overseas investment by the CIC should not exceed 400 per cent of the owned funds of the CIC. Besides, the aggregate overseas investment in financial sector should not exceed 200 per cent of its owned funds.
Further CICs would be allowed to only invest in those financial sector which are well regulated and would have to report to the RBI within 30 days the returns on such investment. The CICs will have to submit the returns quarterly to the RBI, the draft guideline noted.

According to the draft guidelines, under the normal course, all CIC’s having base abroad for doing investment business should approach the RBI with in three months from specified date and under normal course these entities will not be allowed to open branches overseas.

NOC from the bank

These entities would need an “No Objection Certificate” from the bank. The CICs will need prior approval from the Department of Non-Banking Supervision (DNBS) of the Central bank for opening representative offices in other countries.

These representative office can be set for the purpose of liaison work, undertaking market study and research. However these would not be allowed undertake any activity which involves outlay of funds.

KCC Scheme revised

Revising the Kisan Credit Card (KCC) Scheme, the Reserve Bank, on Saturday, asked banks to issue smart card-cum-debit-card to peasants for hassel-free transactions.“The National Payments Corporation of India (NPCI) will design the card of the KCC to be adopted by all the banks with their branding,” RBI said in the revised KCC scheme.All new KCC must be issued as per the revised guidelines of the KCC Scheme, it said. At the time of renewal of existing KCC, farmers must be issued smart card cum debit card, the central added.

“The beneficiaries under the scheme will be issued with a smart card or debit card (Biometric smart card compatible for use in the ATMs or Hand held Swipe Machines and capable of storing adequate information on farmers identity, assets, land holdings and credit profile etc),” it said.

In case the farmer applies for loan against the warehouse receipt of his produce, the banks would consider such requests as per the established procedure and guidelines, it said. However, it added, when such loans are sanctioned, these should be linked with the crop loan account, if any, and the crop loan outstanding in the account could be settled at the stage of disbursal of the pledge loan, if the farmer desires.

KCC scheme aims at providing adequate and timely credit support from the banking system under a single window to the farmers for their cultivation, post harvest expenses consumption requirements of farmer household and working capital for maintenance of farm assets and activities allied to agriculture.

Loan limit would vary depending on land holding, number of crop harvesting, etc. Maximum permissible limit under the KCC scheme is about Rs 11 lakh.

Rate of interest will be linked to Base Rate and is left to the discretion of the banks, RBI said.

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