1.As per RBI, for a company to be classified as an NBFC, to decide on its principal business, it will have to satisfy the two tests of assets and income. The financial assets should be more than 50% of total assets(netted of by intangible assets) and the income from financial assets should be more than 50% of the gross total income. Both these tests need to be satisfied for a company to be regarded as an NBFC.
2.An NBFC cannot commence/carry on its business without-
a)obtaining the certificate of registration from the RBI and
b)having NOF of Rs.25 lakhs (Rs. 200 lakhs from companies applied registration after 21.4.1999)
Clarifications required:
We have a finance and investment company whose main objects clause includes finance and investments activities. If they invest more than 51% of total assets in Investments(not in group companies) and their 51% of total income comes from dividend income –The company is not accepting any public deposits and investments are made for long term purpose and not for trading-
Will it be treated as an NBFC company?
Since their Net Owned Funds(NOF) are less than 2 crores RBI will not permit registration-What is the remedy they have?
Can they continue with the investment activity without taking RBI registration?
regards
Joseph David
CAclubindia
