RBI Advisory and FAQs on NBFC (Non-Banking Financial Company)
Reserve Bank of India *
We forward herewith the FAQs in Manipuri & English languages. An 'Advisory' prepared by RBI on what to check before making deposits with NBFCs in English and Manipuri languages is also attached. We request the Press Information Bureau, as well as your esteemed newspaper to kindly disseminate the information as widely and quickly as possible in the interest of the public.
Regards,
Margaret C. Rawal
Dy. General Manager
Reserve Bank of India
Department of Non-Banking Supervision
Guwahati, Assam
RBI Advisory on What* to check before making deposits with NBFCs
A depositor wanting to place deposit with an NBFC must ensure that :
The NBFC is registered with RBI and is specifically authorised to accept deposits. This can be checked from the list of deposit taking NBFCs published on the RBI website - www.rbi.org.in -> Sitemap-> NBFC List. The depositor should check the list of NBFCs permitted to accept public deposits and also check that it is not appearing in the list of companies prohibited from accepting deposits.
NBFCs have to prominently display the Certificate of Registration (CoR) issued by the Reserve Bank on its site. If an NBFC is authorised to accept public deposit, the certificate reflects that.
RBI does not guarantee the repayment of deposits accepted by NBFCs
NBFCs cannot use the name of the RBI in any manner while conducting their business
Currently, the maximum interest rate that an NBFC can pay to a depositor should not exceed 12.5%. The Reserve Bank, however, keeps changing these interest rates depending on the macro-economic environment. The Reserve Bank publishes the change in the interest rates on www.rbi.org.in -> Sitemap -> NBFC List -> FAQs.
The depositor must insist on a proper receipt for every amount of deposit placed with the company. The receipt should be duly signed by an officer authorised by the company and should state the date of the deposit, the name of the depositor, the amount in words and figures, rate of interest payable, maturity date and amount.
Investors must generally be circumspect if the interest rates or rates of return on investments offered are higher than those offered by others in the market place. Unless the entity accepting funds is able to earn more than what it promises, the entity will not be able to repay the investor as promised. For earning higher returns, the entity will have to take higher risks on the investments it makes. Higher risk could mean undertaking speculative activities and on such activities, there can be no assured return.
As such, the public should forewarn themselves that the likelihood of losing money in schemes that offer high rates of interest are more. Still, if they want to invest in schemes that promise high rates of return, investors must ensure that the entity offering such returns is registered with one of the financial sector regulators and is authorised to accept funds, whether in the form of deposits or otherwise.
* The list is illustrative and not exhaustive
* Margaret C. Rawal sent this info to e-pao.net
The writer is Dy. General Manager, Reserve Bank of India, Guwahati, Assam and can be contacted at margaret(at)rbi(dot)org(dot)in
This article was posted on June 19, 2013.
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