RBI146;s new NBFC norms may hurt India Inc146;s M038;A plans

8220;Although funds must have been arranged, investments cannot be made now due to the stringent single borrower and single group of borrowers exposure norms and many corporate deals may have to be stalled or shelved or reworked,8221; said an official of a finance company.

Let alone making further investments, corporates may need to wind down their positions in order to comply with the capital adequacy requirements and exposure limits in less than 4 months 8212; by March 31, 2007.

In the first draft regulations put up on the RBI web-site, there was a provision exempting holding companies from some or all of the new stipulation on case-to-case basis. In the second draft put up on November 30, this provision was deleted and non-compliant NBFCs were advised to approach RBI before January 31, 2007 for an appropriate dispensation.

It is not clear whether the dispensation will mean exemption from the norms or merely an extension of time beyond March 31, 2007, an NBFC official said.