Ensuring healthy growth of the financial companies, NBFCs plays a critical role in the complete growth of a country. With RBI (Reserve Bank of India) playing the key role of a regulatory body and an authority to supervise and regulate NBFCs in India, it can exercise its powers under the Reserve Bank of India Act, 1934 to issue or cancel the certificate of NBFC License in the country. This newsletter intends to discuss how to appeal against cancellation of NBFC registration.
It is mandatory for every NBFC to obtain a certificate of registration from RBI before undertaking any business. Following conditions are required to be complied by each NBFC at the time of obtaining a certificate of registration:
If at any time, the RBI finds that a NBFC is conducting the business in the manner NOT specified in the Act or not acting in favour of public interest then it can cancel the certificate of registration conferred to a NBFC.
Unless it is in an opinion that the delay in canceling the certificate of registration will prejudicial to public interest or the non-banking financial company or the interest of the depositors, the RBI, before passing an order of cancellation, shall give an opportunity of being heard to the Company.
On cancellation of the certificate of registration, if any company is aggrieved by the order issued by RBI then it has the provision to file an appeal within the period of thirty (30) days from the date of the order of cancellation of the certificate of registration communicated to the company. An appeal can be filed with Central Government and the final decision shall be made by the Central Government where an appeal has been referred to it, or of the Bank where no appeal has been preferred. The appeal can also be filed in case of delay along with the Condonation of Delay Application within reasonable time along with proper justification.
“It is imperative to take stringent measures in order to cease fraudulent activities of the companies that were impersonating themselves as NBFCs and vanishing away with the money of needy people. However, the provision of an appeal to be heard in the case of cancellation of NBFC registration is equally important and just.”
– Shweta Gupta (Founder & CEO, MUDS Management Pvt Ltd.)