The Reserve Bank of India (RBI) has announced the cancellation of Certificates of Registration (CoR) of six Non-Banking Financial Companies (NBFCs). This decision has been taken under Section 45-IA(6) of the Reserve Bank of India Act, 1934, following the surrender of their CoRs by these entities. Below are the details of the cancellations, categorized by the reasons behind the surrender of their registrations.
Category I: Exit from Non-Banking Financial Institution (NBFI) Business
Three NBFCs have exited the business of operating as Non-Banking Financial Institutions, leading to the cancellation of their CoRs:
Category II: Ceasing to Be a Legal Entity
Three other NBFCs ceased to exist as legal entities due to reasons such as amalgamation, merger, dissolution, or voluntary strike-off. The CoRs of these companies were canceled accordingly:
Why Were the Registrations Cancelled?
The cancellation of these registrations signifies that these companies can no longer operate as NBFCs under the regulatory framework of the RBI. The reasons for surrendering the CoRs are broadly classified into two categories:
- Voluntary Exit: Companies choosing to discontinue their NBFI operations.
- Legal Dissolution: Companies ceasing to exist as legal entities due to amalgamation, merger, or dissolution.
RBI’s Power Under Section 45-IA(6)
This section empowers the RBI to cancel the CoR of an NBFC if it:
- Ceases to carry on the business of an NBFI.
- Fails to comply with the terms of registration or regulatory requirements.
- Is no longer a legally recognized entity.
Impact on Stakeholders
The cancellation of these CoRs has the following implications:
- For the Companies: They are prohibited from engaging in any activities that fall under the purview of NBFC operations.
- For Customers: Customers and stakeholders must ensure there are no ongoing financial dealings with these companies. Any queries regarding existing transactions should be directed to the respective entities before their dissolution.
Conclusion
The RBI’s decision to cancel the registrations of these NBFCs underscores its commitment to maintaining transparency and discipline within the financial system. By ensuring that only compliant and active entities operate in the sector, the regulator strengthens trust in India’s financial ecosystem.
Disclaimer: This blog is based on official notifications from the Reserve Bank of India. For specific concerns or clarifications, stakeholders are advised to contact the companies or seek professional advice.
