NBFCs with fund below Rs 2 crore barred from taking deposits

RBI on Tuesday prohibited NBFCs having less than Rs 2 crore of net owned fund from accepting fresh deposits with immediate effect. “NBFCs having minimum net owned fund of less than Rs 200 lakh may freeze their deposits at the level currently held,” the central bank said in a notification.

Net owned funds (NOFs) are paid-up equity capital and free reserves in a company. New companies applying for registration as NBFC are required to have minimum NoF of Rs two crore as per a RBI notification of 1999.

In its guidelines issued on Tuesday, RBI asked those asset finance companies within NBFCs which have investment grade credit rating and credit-to-risk-weighted-asset ratio (CRAR) of 12 per cent, to bring down public deposits to the level of 1.5 times their NOF.