Will be tough on unregistered NBFCs, surrogate deposits: RBI
The Reserve Bank will take stern action against unregistered NBFCs that accept deposits
Conceding that RBI had been a bit lenient with such NBFCs so far, the official said it won’t be the case in future.
“The RBI till recently had been following a slow and soft policy on NBFCs. We gave them enough hearing. But not anymore,” said Archana Mangalagiri, RBI general manager, department of non-banking supervision.
“We will initiate legal action against such companies. It is late, but better late than never. We are going to take solid, punitive action,” she added.
Addressing a seminar on the industry organized by the Bombay Chartered Accountants Society, she further said: “In an extensive exercise conducted recently by RBI on the companies incorporated by the MCA, nearly 1,263 companies were found to be NBFCs, while 96 of them were found to be accepting deposits but without being registered with RBI.”
Talking about the unauthorized acceptance of deposits by the scam-hit Saradha Group, Speak Asia and Rose Valley, Mangalagiri said the reason people fell prey to such schemes was the lack of awareness and financial illiteracy.
Expressing concern over NBFCs raising money through NCDs and diverting them to extremely risky assets like real estate, shell companies as well as the capital market, she said, “There are thousands of companies which in the garb of NCDs are accepting surrogate deposits. It is happening continuously over-the-counter, through the year.
“There are companies that issue NCDs with no terms and conditions, no issue date and no closing day.”
RBI came out with regulations for raising money through private placements by NBFCs in June that sought to space the two issues of Non-convertible Debenture six months apart. However, in early July it put the norms on hold.
“There are some genuine concerns and we are re-looking at the NCD regulations, and we are coming out with something which will align regulations to risk,” Mangalagiri said.