Dormant NBFCs stand to lose registration

Non-Banking Finance Companies (NBFC) which obtain registra­tion, park their funds in fixed deposits with banks and do not commence business have come under the central bank’s lens.

Investments in fixed deposits cannot be treated as financial as- sets. Receipt of interest income on fixed deposits with banks cannot be treated as income from financial assets, the cents bank said in a notification on March 15, 2012. Besides, bans deposits constitute near money and can be used only for tempo­rary parking of idle funds, till commencement of NBFI busi­ness. NBFCs can commence business or carry on. the business of a non-banking financial institution only after obtaining a certificate of registration (CoR) from the RBI. They should have E net owned fund of Rs 25 lakh, which was increased to Rs. 20( lakh with effect from April 21, 1999.

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