The Reserve Bank of India (RBI) has cancelled registration of close to 1,500 non-banking financial companies (NBFCs) in the past two years, with as many as 1,300 having faced the penal action in the first half of this fiscal alone, a senior government official said. The number of NBFCs registered with the RBI has come down to 10,102 as of September 30, from 11,400 at the end of March. “These cancellations were done due to a number of factors, including non-compliance with mandatory requirements like minimum net-owned fund of Rs 2 crore, non-submission of statutory returns, not being traced at given address, etc. In a few cases, NBFCs have even voluntarily surrendered their certificate of registration,” said the official, citing inputs from the central bank that were meant for a reply in Parliament. The cancellation was done following due process of supervision by the regulator.
The spurt in action against errant NBFCs this fiscal suggests a heightened scrutiny of non-bank lenders around the time the Infrastructure Leasing & Finance (IL&FS) group was facing a crisis. The crisis flared up in early September when IL&FS defaulted on a Rs 1,000-crore term loan, leading to the government and various financial sector regulators rushing into stemming the fallout of the crisis. NBFCs are usually subject to on-site inspection and off-site monitoring through return submission and through statutory auditors’ reports.
via Tight scrutiny: RBI cancels registration of 1,300 NBFCs in H1FY19 – The Financial Express
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