An unrated NBFC, except certain Asset Finance companies (AFC), cannot accept public deposits. An exception is made in case of unrated AFC companies with CRAR of 15% which can accept public deposit without having a credit rating up to a certain ceiling depending upon its Net Owned Funds. NBFC may get itself rated by any of the five rating agencies namely, CRISIL, CARE, ICRA and FITCH, Ratings India Pvt. Ltd and Brickwork Ratings India Pvt. Ltd
The symbols of minimum investment grade rating of the Credit rating agencies are:
|Name of rating agencies||Nomenclature of minimum investment
grade credit rating (MIGR)
|CRISIL||FA- (FA MINUS)|
|ICRA||MA- (MA MINUS)|
|CARE||CARE BBB (FD)|
|FITCH Ratings India Pvt. Ltd.||tA-(ind)(FD)|
|Brickwork Ratings India Pvt. Ltd.||BWR FBBB|
It may be added that A- is not equivalent to A, AA- is not equivalent to AA and AAA- is not equivalent to AAA.
If rating of an NBFC is downgraded to below minimum investment grade rating, it has to stop accepting public deposits, report the position within fifteen working days to the RBI and bring within three years from the date of such downgrading of credit rating, the amount of public deposit to nil or to the appropriate extent permissible under paragraph 4(4) of Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998.
Course of action when NBFC defaults in repayment of deposit
If an NBFC defaults in repayment of deposit, the depositor can approach Company Law Board or Consumer Forum or file a civil suit in a court of law to recover the deposits.