In light of Non-Banking Financial Companies ("NBFCs") which are no longer engaged in the business of Non Banking Financial Institution ("NBFI") continuing to hold the Certificate of Registration ("CoR") even though they are no longer required/ eligible to hold the CoR granted by the Reserve Bank of India ("RBI"), the RBI has vide its circular dated 21st September 2006 requested all NBFCs to submit a certificate from their Statutory Auditors annually to communicate that they continue to take on the business of NBFCs and hence would require the CoR for the same. A company will be treated as a NBFC if its financial assets are more than 50% of its total assets and income from financial assets is more than 50% of the gross income.
The first of such certificate should relate to the financial year ending 31st March 2006 and will have to be submitted not later than 30th June every year to the Regional Office of the Department of Non Banking Supervision under whose jurisdiction the NBFC is registered.
This amendment has been introduced with a view to ensuring that only NBFCs which are actually engaged in the business of NBFI hold CoR and further ensuring that the number of NBFCs actively functioning is rightly depicted.
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