Rbi Eases Norms For Merchant Bankers

The Reserve Bank of India (RBI) has exempted merchant banking companies from the provisions of RBI Act , 1934, relating to compulsory registration (section 45IA), maintenance of liquid assets (sections 45IB), creation of reserve fund (section 45IC) and all provisions of the recent directions relating to deposit acceptance and prudential norms.

Sebi had recently, through an amendment to Merchant Banking (Rules and Regulations) 1992, made companies ineligible for registration as a merchant banker if they were carrying on any of the financial activities mentioned in the RBI Act.

In a press release the Reserve Bank of India has indicated that merchant banking companies would be eligible for the above exemptions if they satisfy the following conditions: They should be registered with Sebi under section 12 of the Sebi Act 1992 and should carry on the business of merchant banker in accordance with rules or regulations framed by Sebi; they should acquire securities only as part of their merchant banking activities; they should not carry on any other financial activities as mentioned in section 45I(c) of the RBI Act 1934; they entities should not accept or hold public deposits.

 

It may be recalled that RBI had earlier exempted stock exchanges from certain core provisions of RBI Act as these entities are registered and regulated by Sebi.