RBI cautions NBFCs

The RBI, in a statement here, said such display of RBI name in any manner whatsoever is unauthorised and may attract penal action under RBI act and or the Indian penal code.

It has informed members of public that a registration certificate issued by it to an NBFC simply enables an NBFC for commencing or carrying on the Financial business and the responsibility for repayment of the principal and interest is that of the NBFC.

Such deposits are not guaranteed or insured by government, RBI or any other public agency, RBI said.

It said NBFCs having net owned funds NOF below Rs 25 lakh are not allowed to accept public deposits including the renewal of maturing public deposits, since such NBFCs are not eligible to get certificate of registration.

Even after registration with RBI, new NBFCs incorporated after January nine, 1997, and those which do not hold/accept public deposits on the date of grant of registration, have been directed to obtain prior specific approval of RBI for acceptance of public deposits.

The central bank said unincorporated bodies engaged in Financial business are prohibited from issuing any advertisement for soliciting deposits as also from accepting deposits from other than the relatives as specified in RBI act or in the corporate bodies notified under RBI act.

Further, the question of registration of unincorporated bodies with the bank does not arise. Hence, the use of RBI name in any manner will be illegal and unauthorised, the central bank stated.