RBi Has revised Guide line for Raising Money through Private Placement of Non-Convertible Debentures (NCDs) by NBFCs according to Companies Act 2013

Please refer to the cir­cu­lars DNBS(PD)CC.No.330/03.10.001/2012–13 dat­ed June 27, 2013 and the DNBS (PD)CC.No.349/03.10.001/2013–14 dat­ed July 02, 2013 on the subject.

2. In super­s­es­sion of cir­cu­lars DNBS(PD)CC.No.330/03.10.001/2012–13 dat­ed June 27, 2013 and the DNBS (PD)CC.No.349/03.10.001/2013–14 dat­ed July 02, 2013, the guide­lines on pri­vate place­ment of NCDs for NBFCs have been reviewed in the light of the pro­vi­sions of Com­pa­nies Act 2013 and the Rules issued there­un­der. The noti­fi­ca­tion DNBS (PD) 257/ PCGM (NSV)-2013 dat­ed June 27, 2013 shall con­tin­ue to be in force.

3. The revised guide­lines are enclosed in the Annex. It may be not­ed that the pro­vi­sions of Com­pa­nies Act, 2013 and Rules issued there­un­der shall be applic­a­ble wher­ev­er not contradictory.

4. Noti­fi­ca­tion amend­ing the NBFCs Accep­tance of Pub­lic Deposits (Reserve Bank) Direc­tions, 1998 is enclosed.

Yours faith­ful­ly,

(M. S. Gharde)
Gen­er­al Manager-in-Charge

Annex

A. Guide­lines on Pri­vate Place­ment of NCDs (matu­ri­ty more than 1 year) by NBFCs:

1. NBFCs shall put in place a Board approved pol­i­cy for resource plan­ning which, inter-alia, should cov­er the plan­ning hori­zon and the peri­od­ic­i­ty of pri­vate placement.

2. The issues shall be gov­erned by the fol­low­ing instructions:

1. The min­i­mum sub­scrip­tion per investor shall be Rs. 20,000 (Rupees Twen­ty thousand);
2. The issuance of pri­vate place­ment of NCDs shall be in two sep­a­rate cat­e­gories, those with a max­i­mum sub­scrip­tion of less than Rs. 1 crore and those with a min­i­mum sub­scrip­tion of Rs. 1 crore and above per investor;
3. There shall be a lim­it of 200 sub­scribers for every finan­cial year, for issuance of NCDs with a max­i­mum sub­scrip­tion of less than Rs. 1 crore, and such sub­scrip­tion shall be ful­ly secured;
4. There shall be no lim­it on the num­ber of sub­scribers in respect of issuances with a min­i­mum sub­scrip­tion of Rs. 1 crore and above; the option to cre­ate secu­ri­ty in favour of sub­scribers will be with the issuers. Such unse­cured deben­tures shall not be treat­ed as pub­lic deposits as defined in NBFCs Accep­tance of Pub­lic Deposits (Reserve Bank) Direc­tions, 1998.
5. An NBFC (exclud­ing Core Invest­ment Com­pa­nies) shall issue deben­tures only for deploy­ment of funds on its own bal­ance sheet and not to facil­i­tate resource requests of group enti­ties / par­ent com­pa­ny / associates.
6. An NBFC shall not extend loans against the secu­ri­ty of its own deben­tures (issued either by way of pri­vate place­ment or pub­lic issue).

3. Tax exempt bonds offered by NBFCs are exempt­ed from the applic­a­bil­i­ty of the circular.

4. For NCDs of matu­ri­ty upto one year, guide­lines on Issuance of Non-Con­vert­ible Deben­tures (Reserve Bank) Direc­tions, 2010, dat­ed June 23, 2010, by Inter­nal Debt Man­age­ment Depart­ment, RBI shall be applicable.

RESERVE BANK OF INDIA
DEPARTMENT OF NON-BANKING REGULATION
CENTRAL OFFICE, CENTRE I, WORLD TRADE CENTRE,
CUFFE PARADE, COLABA, MUMBAI, 400 005.

Noti­fi­ca­tion No. DNBR.(PD) 006 /GM(MSG)-2015 dat­ed Feb­ru­ary 20, 2015

The Reserve Bank of India, hav­ing con­sid­ered it nec­es­sary in pub­lic inter­est and being sat­is­fied that, for the pur­pose of enabling the Bank to reg­u­late the cred­it sys­tem to the advan­tage of the coun­try, it is nec­es­sary to amend the Non-Bank­ing Finan­cial Com­pa­nies Accep­tance of Pub­lic Deposits (Reserve Bank) Direc­tions (Noti­fi­ca­tion No. DFC. 118/DG(SPT)-98 dat­ed Jan­u­ary 31, 1998) (here­inafter referred to as the ‘said Direc­tions’) , in exer­cise of the pow­ers con­ferred by sec­tion 45J, 45K, 45L and 45 MA of the Reserve Bank of India Act, 1934 (2 of 1934) and of all the pow­ers enabling it in this behalf, here­by directs that the said Direc­tions shall be amend­ed with imme­di­ate effect as fol­lows, namely-

1. Inser­tion of new clause (fa): In para­graph 2, of the said Direc­tions, in sub. para­graph (1), after clause (xii)(f), the fol­low­ing new clause shall be insert­ed, namely:-

“(fa) any amount raised by issuance of non-con­vert­ible deben­tures with a matu­ri­ty one year and above and hav­ing the min­i­mum sub­scrip­tion per investor at Rs.1 crore and above, pro­vid­ed that such deben­tures have been issued in accor­dance with the guide­lines issued by the Reserve Bank as in force from time to time in respect of such non-con­vert­ible debentures.”

(M. S. Gharde)
Gen­er­al Manager-in-Charge