Published on Thu, Apr 22, 2010 at 09:21 | Source : Reuters
Updated at Thu, Apr 22, 2010 at 09:38
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RBI releases draft rules on investment firms
The Reserve Bank of India (RBI) on Wednesday released draft rules for core investment companies, saying those firms with asset size below 1 billion rupees may not obtain a certificate of registration on meeting some conditions.
The Reserve Bank of India (RBI) on Wednesday released draft rules for core investment companies, saying those firms with asset size below 1 billion rupees may not obtain a certificate of registration on meeting some conditions. Such exemption would be provided if 90% of the total assets of such firms are invested in shares of investee companies as equity stakes, the draft guidelines, posted on the central bank's website said.
However, core investment companies with an asset size of Rs 1 billion or more will be considered "systemically important core investment companies" and would be required to obtain certificate of registration from the central bank.
Such firms should not trade in shares except for block sale to dilute or divest holdings and should not accept or hold public deposits, the notification said.
These companies should keep a minimum capital ratio, according to which their adjusted net worth would not be less than 30% of the total risk-weighted assets on the balance sheet.
The outside liabilities of these companies would not exceed two-and-a-half times of their adjusted net worth, calculated as on the date of the last audited balance sheet, the RBI said.
