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All NBFCs require prior approval before acquisition of 10% shares: RBI

LiveMint logoLiveMint 26-05-2014 Joel Rebello

Mumbai: Deposit- and non-deposit taking non-banking financial companies (NBFCs) will henceforth have to apply for Reserve Bank of India (RBI) permission for any transaction that requires transfer of more than 10% of shares in the companies, the central bank said in a notification on Monday.

This is a change from exsting rules that RBI approval is required only in cases of acquisition/transfer of control of NBFCs accepting deposits. Any transaction that gives the acquirer control over the NBFC will also require the RBI’s go-ahead.

“Prior written approval of the Reserve Bank would also be required before approaching the Court or Tribunal under Section 391-394 of the Companies Act, 1956 or Section 230-233 of Companies Act, 2013 seeking order for mergers or amalgamations with other companies or NBFCs,” RBI said. The changes have been made “to enable RBI to ensure the ‘fit and proper’ character of the management of NBFCs,” the central bank said.

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