Guidelines on Corporate Governance — For NBFC: RBI

RBI/2014–15/552 DNBR (PD) CC.No.029/ 03.10.001/ 2014–15

April 10, 2015

Please refer to the Revised Reg­u­la­to­ry Frame­work for NBFCs issued vide DNBR (PD) CC.No.002/ 03.10.001/ 2014–15 dat­ed Novem­ber 10, 2014 (the Frame­work). Cor­po­rate Gov­er­nance and Dis­clo­sure norms for NBFCs, con­tained in para 9 of the Frame­work, have been reviewed based on the feed­back received from indus­try par­tic­i­pants and the dif­fi­cul­ties expressed by them in its effec­tive imple­men­ta­tion. Accord­ing­ly, the fol­low­ing changes / clar­i­fi­ca­tions in the mat­ter may be noted.

2. Para 9 of the Frame­work shall not apply to a Sys­tem­i­cal­ly Impor­tant Core Invest­ment Com­pa­ny as defined in the Core Invest­ment Com­pa­nies (Reserve Bank) Direc­tions, 2011. How­ev­er, Sys­tem­i­cal­ly Impor­tant Core Invest­ment Com­pa­nies are encour­aged to fol­low these as a pru­dent measure.

3. (i) In terms of para 9.5(iv) of the Frame­work, NBFCs shall fur­nish to the Reserve Bank a quar­ter­ly state­ment on change of direc­tors cer­ti­fied by the audi­tors and a cer­tifi­cate from the Man­ag­ing Direc­tor that fit and prop­er cri­te­ria in selec­tion of direc­tors have been followed.

(ii) It is clar­i­fied that the quar­ter­ly state­ments, can be cer­ti­fied by the Man­ag­ing Direc­tor, except that the state­ment per­tain­ing to the quar­ter end­ed March 31 need to be nec­es­sar­i­ly cer­ti­fied by the auditors.

4. (i) In terms of the Fit and Prop­er cri­te­ria for direc­tors of NBFCs giv­en in Annex 1 of the Frame­work, inde­pen­dent / non-exec­u­tive direc­tors of an NBFC should be between 35 to 70 years of age.

(ii) The age lim­it pre­scribed as above has been done away with and pro­vi­sions in Com­pa­nies Act, 2013 in this regard shall apply.

5. (i) In terms of para 3(iv) of Annex 3 of the Frame­work, NBFCs shall com­mu­ni­cate out­come of Board delib­er­a­tions to direc­tors and con­cerned per­son­nel and pre­pare and cir­cu­late min­utes of the meet­ing of Board to direc­tors in a time­ly man­ner and to the extent pos­si­ble with­in two busi­ness days of the date of con­clu­sion of the Board meeting.

(ii) It is clar­i­fied that cir­cu­la­tion of min­utes with­in two busi­ness days is not manda­to­ry and pro­vi­sions in Com­pa­nies Act, 2013 in this regard shall apply.

All Direc­tions on Cor­po­rate Gov­er­nance are being con­sol­i­dat­ed in the enclosed Noti­fi­ca­tion No. DNBR. 019/CGM (CDS)-2015 dat­ed April 10, 2015 on Non-Bank­ing Finan­cial Com­pa­nies – Cor­po­rate Gov­er­nance (Reserve Bank) Direc­tions, 2015.