Applicability of section 372_a

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

20 March 2012 Sir,

Please clarify whether section 372A of the Companies Act, 1956 (inserted w.e.f. 31/10/1998) is applicable to NBFC. On the above I am of the view that this section is not applicable to NBFC in the wake of the following-

a) Sub Section 8 ( a ) ( i) exempts certain companies viz banking insurance and housing finance companies and also companies established with the object of financing industrial enterprises; and

b) Also section 45 Q of the RBI Act, 1934 overrides other laws which have provision inconsistent with the provision of the RBI Act. Prudential Norms directions issued under section 45JA of the RBI Act have specific Para 20 (Concentration of credit/ investment) which regulates the lending and/or investment limit to single/group of borrowers . As such provision of Para 20 would override section 372A by virtue of section 45 Q.

Ajay Mishra

Ajay Mishra (Expert)
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24 March 2012 Hi

I agree with you the provision of section 372A will not apply to NBFC companies because they govern by RBI Act or other Act under which they are governed.

Regards

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