RBI panel for maximum of two-layered core investment companies by 2021

The RBI panel's advice to limit CIC to two levels is another reform for better financing arrangement

The Reserve Bank of India’s (RBI’s) working group set up to review the extant regulations on core investment companies (CICs) has favoured restricting the number of layers of such entities within a group to two by 2021.

“Any CIC within a group shall not make investment through more than a total of two layers of CICs, including itself,” said the panel in its report. If the recommendation is implemented, it will cut down the room for leverage by companies. 

The RBI’s recent Financial Stability Reports had pointed to the central bank’s discomfort over the high level of pledged shares by India Inc,