RBI to monitor small finance firms

MUMBAI, JAN 18: The Reserve Bank of India has shifted its focus to non-banking finance companies (NBFCs) with net owned funds (NOFs) belo...

MUMBAI, JAN 18: The Reserve Bank of India has shifted its focus to non-banking finance companies (NBFCs) with net owned funds (NOFs) below Rs 25 lakh holding public deposits. With work relating to the registration of NBFCs with net owned funds of Rs 25 lakh and more almost completed, RBI has said that it will now concentrate on monitoring the operations of these finance companies.

RBI deputy governor SP Talwar, while inaugurating the review meeting of the department of non-banking supervision, called upon the heads of RBI regional offices to remain vigilant about the unauthorised activities of some of the NBFCs and fly-by-night operators which accept public deposits in contravention of rules and regulations.

Talwar has set out an agenda for the department of non-banking supervision for the year 1999 and has asked officials to ensure through the scrutiny of returns or selective inspections that NBFCs having NOFs of below Rs 25 lakh do not accept fresh public deposits or renew maturing public deposits. Hehas asked RBI officials to call for up to date information from all these companies regarding the public deposits held by them and decide on further courses of action if any of the directives are violated.

Story continues below this ad

As per the agenda for the year, officials will ensure that unincorporated bodies do not accept deposits in contravention of law and no NBFC runs its business like a residuary non-banking company (RNBC) without the compliance of RNBC regulations. RBI will go in for an intensive publicity campaign to educate depositors of NBFCs and unincorporated bodies and will also improve the liaison with credit rating agencies, state government officials at various levels’ local police, local NBFC associations and local investor groups.

The Reserve bank will also ensure that NBFCs prohibited from accepting public deposits do not do so and the companies which have been denied registration do not carry out NBFC business and no NBFC functions without a registration certificate from RBI. RBI will set up marketintelligence cells at all levels in the bank to strengthen the vigilance machinery.

RBI has put in place a comprehensive regulatory and supervisory framework for overseeing the activities of NBFCs. The central bank has also installed latest computers and state-of-the-art information technology in the department of non-banking supervision to effectively monitor the NBFC sector. The returns filed by NBFCs will now be put through detailed scrutiny.