Groups with CIC should form 'Risk Management Committee': RBI WG

Last Updated: Thu, Nov 07, 2019 10:37 hrs
RBI Mumbai gate

New Delhi: An RBI Working Group (WG) on Core Investment Companies (CICs) has recommended corporate groups having specilised non-banking financial companies (NBFCs) to also establish a "Group Risk Management Committee".

According to the RBI's WG formed to "review regulatory and supervisory framework for CICs", capital contribution by "a CIC in a step-down CIC, over and above 10 per cent of its owned funds, should be deducted from its adjusted networth, as applicable to other NBFCs. Further, step-down CICs may not be permitted to invest in any other CIC, while allowing them to invest freely in other group companies."

"The number of layers of CICs in a group should be restricted to two. As such, any CIC within a group shall not make investment through more than a total of two layers of CICs, including itself," the RBI's Working Group recommended.

"Offsite returns may be designed by the Reserve Bank and may be prescribed for the CICs on the lines of other NBFCs. Annual submission of statutory auditors certificates may also be mandated; and onsite inspection of CICs maybe conducted periodically," it added.

A CIC is a type of NBFC which carries out the business of acquiring shares and securities and holds no less than 90 per cent of its net assets in the form of investment in equity shares, preference shares, bonds, debentures, debt or loans in group companies.