GUIDELINES ON FAIR PRACTICES CODE FOR NBFCS – GRIEVANCE REDRESSAL MECHANISM

Notification No.: RBI/2012-13/416

Date: 18th February, 2013

The Reserve Bank vide its circular dated March 26, 2012, issued revised guidelines on Fair Practices Code (FPC) for all NBFCs to be adopted by them while doing lending business. The guidelines were reviewed in view of the creation of a new category of NBFCs viz; NBFC-MFIs and also rapid growth in NBFCs’ lending against gold jewellery.

The guidelines require that the Board of Directors of NBFCs should lay down the appropriate grievance redressal mechanism within the organization to resolve disputes between the company and its customers and the mechanism should ensure that all disputes arising out of the decisions of lending institutions' functionaries are heard and disposed of at least at the next higher level.

At the operational level, all NBFCs are required to display prominently, for the benefit of their customers, at their branches / places where business is transacted, the details of the grievance redressal officer belonging to their company as also that of the local office of RBI

The revised guidelines are issued under Section 45 L of the Reserve Bank of India Act, 1934. The NBFCs may note to make suitable amendments in their existing FPC. The FPC so modified should be put in place by all NBFCs with the approval of their Boards within one month from the date of issue of this circular and should be published and disseminated on the web-site of the company, if any, for the information of the public.

Regards

CA. Mona Singhal

Partner

Arpit Gupta & Associates

Chartered Accountants

701, Nirmal Tower,

26, Barakhamba Road,

Connaught Place, 

Delhi-110001

Mobile No. +91-9873082769

Website: www.caaga.co.in

RBI Enhances ECB Limit For NBFC-IFCs Under Automatic Route From 

50% Of Owned Funds To 75%

Notification No.: RBI/2012-13/367, dated 7^th January, 2013

As per the current guidelines, Non-Banking Finance Companies (NBFCs) categorized as Infrastructure Finance Companies (IFCs) by the Reserve Bank and complying with the norms prescribed in the DNBS (Department of Non Banking Supervision) Circular dated February 12, 2010 are permitted to avail of External Commercial Borrowings (ECBs), including the outstanding ECBs, up to 50 per cent of their owned funds under the automatic route. ECBs by IFCs above 50 per cent of their owned funds are being considered under the approval route.

The permitted end-use should be for on-lending to the infrastructure sector, as defined under the extant ECB policy. IFCs should also hedge their currency risk in full.

Now it has been decided to enhance the ECB limit for NBFC-IFCs under the automatic route from 50 % of their owned funds to 75 % of their owned funds, including the outstanding ECBs.

NBFC-IFCs desirous of availing ECBs beyond 75 % of their owned funds would require the approval of the Reserve Bank and will, therefore, be considered under the approval route.

It has also been decided to reduce the hedging requirement for currency risk from 100 per cent of their exposure to 75 per cent of their exposure.

Designated Authorized Dealer (AD) banks should ensure compliance with the extant norms while certifying the ECB application both under the automatic and approval routes

Designated AD Category – I banks shall continue to certify the leverage ratio (i.e. outside liabilities/owned funds) of NBFC-IFCs desirous of availing ECBs under the approval route while forwarding such proposals to the Reserve Bank of India as per A.P. (DIR Series) Circular No.70 dated January 25, 2012.

The amended ECB policy will come into force with immediate effect and is subject to review based on the experience gained in this regard.

All other aspects of ECB policy, such as, eligible borrower, recognized lender, end-use, average maturity period, all-in-cost, maximum permissible limit under the automatic route, prepayment, refinancing of existing ECB and reporting arrangements remain unchanged.

Regards

CA. Mona Singhal

Partner

Arpit Gupta & Associates 

Chartered Accountants

701, Nirmal Tower 

26, Barakhamba Road

Connaught Place, Delhi -110001

Mobile:- +91-9873082769