Reserve Bank of India (RBI)
Financial activity as principal business is
when a company’s financial assets constitute more than 50 per cent of the total
assets and income from financial assets constitute more than 50 per cent of the
gross income. A company which fulfils both these criteria will be registered as
NBFC by RBI. The Reserve Bank has been given the powers under the RBI Act
1934 to register, lay down policy, issue directions, inspect, regulate,
supervise and exercise surveillance over NBFCs that meet the 50-50 criteria of
principal business. The Reserve Bank can penalize NBFCs for violating the
provisions of the RBI Act or the directions or orders issued by RBI under RBI
Act. The penal action can also result in RBI cancelling the Certificate of
Registration issued to the NBFC, or prohibiting them from accepting deposits
and alienating their assets or filing a winding up petition.
Only a few NBFCs are authorized by RBI to
accept deposits. Check the list at www.rbi.org.in/permittednbfcs . It is illegal for any financial entity or
unincorporated body to make a false claim of being regulated by the Reserve
Bank to mislead the public to collect deposits and is liable for penal action
under the Indian Penal Code. Information in this regard may be forwarded to the
nearest office of the Reserve Bank and the Police.
For more information, please go to http://www.rbi.org.in .