RBI cancels licences of 56 NBFCs

RBI had tightened rules for NBFCs in November 2014, to bring their norms in line with those of banks

The Reserve Bank of India (RBI) has cancelled the registration of 56 non-banking financial companies (NBFCs). With this, these companies cannot transact the business of a non-banking financial institution.

These include companies like Compact Lease Financing, Vapi Investments, Shree Holdings, Neelkanth Fintrade, ABNL Investment  among others. Bajaj Finserve Limited was also on the list, however since it is the holding company for Bajaj Finance (an NBFC), Bajaj Allianz Life and Bajaj Allianz General, it decided to withdraw its NBFC licence, since it already has Bajaj Finance operating as an NBFC.

In November 2014, in a bid to bring NBFC norms in line with those of banks, RBI had unleashed tighter rules for NBFCs. According to the new guidelines, NBFCs will require higher minimum capital, have less time to declare bad loans, and a board-approved fit and proper criteria for appointment of directors.

The new norms, which would be implemented in a phased manner, were made applicable for NBFCs that manage funds worth Rs 500 crore and for those that accept public deposits. The central bank had then said that it would also start granting fresh NBFC licences.