The Reserve Bank of India (RBI) on Wednesday withdrew the special short-term foreign currency borrowings facility for non-banking financial companies (NBFCs) and housing finance companies. The central bank made the decision after reviewing the macroeconomic conditions and improvements in the domestic credit and liquidity conditions, it said in a statement.
The facility was extended to these companies after the September 2009 collapse of US-based investment bank Lehman Brothers’ Holdings Inc., which led to a global liquidity crunch. RBI had allowed these companies to raise short-term foreign currency borrowings of up to 50% of their net owned funds, comprising paid-up equity capital and reserves, or $10 million, whichever was higher.
RBI circular on above is as follows:-
DNBS (PD).CC. No 167 /03.10.01 /2009-10
February 04, 2010
All Non-Banking Financial Companies
Compliance with FDI norms-Half yearly certificate from Statutory Auditors of NBFCs
NBFCs having FDI whether under automatic route or under approval route have to comply with the stipulated minimum capitalisation norms and other relevant terms and conditions, as amended from time to time under which FDI is permitted.
2. As such these NBFCs are required to submit a certificate from their Statutory Auditors on half yearly basis (half year ending September and March) certifying compliance with the existing terms and conditions of FDI. Such certificate may be submitted not later than one month from the close of the half year to which the certificate pertains, to the Regional Office in whose jurisdiction the head office of the company is registered.
Chief General Manager In-Charge