Tuesday, October 4, 2022

Registration of 1,490 NBFCs cancelled in 2 years; Kolkata tops the list

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PW Bureau

Kolkata saw 617 cancellations, New Delhi is on the second spot with 203, followed by Mumbai at 190, data provided by the RBI showed

New Delhi: The Reserve Bank of India (RBI) has annulled the registration of 1,490 non-banking financial companies (NBFCs) in order to tighten the noose around them and step up oversight. The list includes NBFCs that failed to meet prudential norms and surrendered registration voluntarily. At the top of the list is Kolkata with 617 cancellations, New Delhi occupies the second spot with 203, followed by Mumbai at 190, data provided by the RBI in response to a question raised in the Lok Sabha said.

The factors that have resulted in the cancellations include, non-compliance with mandatory requirements like minimum net-owned funds (NoF) of Rs 20 million, not submitting statutory returns, and companies not being traced at the addresses they gave. The RBI said NBFCs registered with the regulator will have to undergo on-site inspection and off-site monitoring through return submission and statutory auditors’ reports.

According to the Financial Stability Report published by the RBI in June 2018, loans and advances of the sector increased 21.2 percent and investments 13.4 percent. The aggregate balance sheet size at the end of March was Rs 22.1 trillion.

The move comes in the backdrop of defaults by Infrastructure Leasing & Financial Services (IL&FS) and its subsidiaries in the second quarter of the current fiscal. The debt-crisis dealt a major blow to the financial system and hit liquidity for finance companies.

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