Reserve Bank acts -- post facto
Our Banking Bureau
January 2: The Reserve Bank of India barred 24 non-banking finance companies (NBFCs) from accepting deposits between April and December 1997. The central bank also prohibited these NBFCs from selling and transferring their properties and assets following the CRB failure.The finance companies have been prohibited from accepting deposits in any form -- fresh deposits or by way of renewals -- as well as selling their assets under sub-section(4) of Section 45 K and 45 MB of the amended RBI Act. The ban on sale of assets remains valid for six months. The Reserve Bank of India (Amendment) Act 1997 has armed the central bank with the power to file petition for winding up of an NBFC in certain circumstances under Section 45MC. The Reserve Bank exercised its power for the first time on May 21 when the CR Bhansali promoted CRB Caps downed shutters. This Section enables the Reserve Bank to file a winding up petition against an NBFC under the relevant provisions of the Companies Act, 1956 provided it is satisfied
that the continuance of the NBFC is detrimental to the public interest. Under the amended RBI Act, every deposit accepted by an NBFC is required to be repaid, unless renewed, as per the terms and conditions of the deposit. If any NBFC fails to repay any deposit, the Company Law Board -- either on its own or being approached by the depositors -- may force the company to repay the sum. Under the provisions of Section 45-1A of the Act, the Reserve Bank also directed the NBFCs and RNBCs, operating before January 9, 1997, to apply a certificate of registration.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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