RBI allows NUCFDC to privately place shares with over 200 subscribers

RBI has permitted NUCFDC to offer equity shares on a private placement basis to more than 200 persons annually, subject to policy, reporting and usage conditions

The Reserve Bank of India (RBI) has allowed National Urban Co-operative Finance and Development Corporation Limited (NUCFDC) to make an offer or subscribe to its equity shares on a private placement basis to more than 200 people in aggregate in a financial year. NUCFDC is an umbrella organisation for over 1,400 primary urban co-operative banks (UCBs).

 

The directions will come into force with immediate effect.

 

RBI said NUCFDC should have a board-approved policy for resource planning which covers the planning horizon and the periodicity of the private placement. The offer or invitation for the private placement of equity shares under these guidelines shall only be made to UCBs and the National Co-operative Development Corporation (NCDC).

   

“NUCFDC shall not extend any loan or advance or any other kind of financial accommodation against the security of its own shares,” RBI said in a notification on Thursday.

 

The RBI also stated that proceeds of the share capital raised under these guidelines should be used for purposes consistent with the NUCFDC’s mandate.

 

It also has to submit a quarterly statement containing the amount of equity raised, the number and category of subscribers and the subscription amounts (during the quarter as well as cumulatively) to the Department of Regulation, RBI, Central Office within 15 days from the close of a quarter. Subject to the provisions of these directions, NUCFDC shall ensure compliance with all applicable statutory and regulatory requirements with regard to the private placement of securities.