RBG Leasing And Credit Limited Vs Reserve Bank of India & Anr. (Delhi High Court)
In the case of RBG Leasing And Credit Limited Vs Reserve Bank of India & Anr., the Delhi High Court addressed the cancellation of the petitioner’s Non-Banking Financial Company (NBFC) registration due to failure to meet the mandated Net Owned Fund (NOF) of Rs. 200 lakh by the specified deadline. The petitioner, an NBFC since May 2001, was subject to RBI’s regulatory framework, which required NBFCs to maintain an NOF of Rs. 100 lakh by March 2016 and Rs. 200 lakh by March 2017. While the petitioner managed to achieve the required NOF by March 2018, they were issued a show cause notice for non-compliance with the initial deadline. Despite submitting a response, the RBI deemed it unsatisfactory and proceeded to cancel the company’s Certificate of Registration (COR). The petitioner appealed, but the appellate authority upheld the cancellation order, even though the required NOF had been reached by March 2019.
The Delhi High Court found that the matter was similar to previous cases involving other NBFCs, where courts had set aside such cancellation orders. Based on the petitioner’s submission and similar precedents, the court set aside both the RBI’s cancellation order and the appellate authority’s decision. The case was remitted to the RBI for fresh consideration, instructing the bank to reassess the petitioner’s compliance and additional materials. The court granted the petitioner the opportunity to file a detailed representation within 15 days, urging the RBI to reconsider the case in light of current regulations. This decision reopens the case, giving the NBFC another chance to justify its compliance with the NOF requirement.
