Lok Sabha Question No. 2045 (UNSTARRED), answered on 2018-12-21
Subject: Cancellation of NBFCs Registration
Ministry: FINANCE
Asked by: L.R. Shivaramegowda, JYOTIRADITYA MADHAVRAO SCINDIA, Kunhalikutty, P.K.

## GOVERNMENT  OF INDIA

## LOK SABHA UNSTARRED QUESTION NO. 2045

## MINISTRY  OF FINANCE DEPARTMENT  OF FINANCIAL SERVICES

TO BE ANSWERED ON THE 21 ST  DECEMBER 2018/ AGRAHAYANA 30, 1940  (SAKA)

## Cancellation  of NBFCs Registration

## 2045. SHRI L.R. SHIVARAME  GOWDA: SHRI  JYOTIRADITYA  M. SCINDIA: SHRI  P.K.  KUNHALIKUTTY:

Will  the Minister  of FINANCE  be pleased to state:

- (a) whether  the number  of Non-Banking  Finance  Companies  (NBFCs)  is increasing  day by day  in the country  and operating  without  requisite  registration  , if so, the details  thereof including  the reaction  of the Government  thereto;
- (b) whether   the  Reserve   Bank of  India  (RBI)  has  recently   cancelled   certification  of registration  of a large  number  of such NBFCs  for unspecified  reasons, if so, the details  of the NBFCs  whose registrations  have been cancelled  across the country  during  the last two years  along  with  the specific  reasons  each for cancelling  the registration  of NBFCs;
- (c) the details  of new  NBFCs  registered  by  RBI during  the calendar  year  2017 and  2018;
- (d) the  details   of  the  NBFCs   against   whom   complaints regarding   non-payment   of investors  money  have been received  by  the RBI during  the last three  years  along  with  the reaction  of the Government  thereto; and
- (e) whether  the Government  has any  proposal  to regulate/scrutinize such companies  in the  wake   of  the  recent   scams  noticed   therein   and  if  so,  the  details   thereof   and  the monitoring  mechanism  put in place to keep a check  on the activities  of the said companies and to protect  the interest  of the investors?

## ANSWER Minister of State in the Ministry  of Finance

## (SHRI SHIV PRATAP  SHUKLA)

(a) to (e): RBI has apprised  that  it registers  and regulates  NBFCs  under Chapter  IIIB of the RBI Act,  1934, and that  as per section 45IA of the Act,  it is mandatory for companies  doing Non-Banking  Financial  Institution  (NBFI) business and meeting  Principal  Business Criteria of  company's   financial   assets  constituting more  than   50  per  cent  of  the  total   assets  and income   from  financial   assets  being more   than   50  per  cent  of  the  gross  income   to  get registered  as NBFC  with  RBI.

RBI has further  informed  that  the number  of NBFCs  registered  with  it has come down  from 11,400 as on 31.3.2018  to 10,102 as on 30.9.2018,  due to cancellation  of the Certificate  of Registration   (CoR)   of  companies   which   did  not  comply   with   those  mandatory   RBI requirements.  Details  of cancelled  NBFCs  for the last two  years  are at Annexure  1. These cancellations   have  happened   due  to  either   voluntary surrender   of  CoR   or  due  to  noncompliance   with   mandatory   requirements   like   minimum   Net   Owned   Fund   (NOF)   of  ₹  2 crore,  non-submission  of statutory  returns,  not being  traced  at the given  address,  etc. RBI has also informed  that  NBFCs  registered  with  RBI are subject  to on-site inspection  and off-site monitoring  through  return  submission  and through  statutory  auditors'  reports.  On the basis of assessment through  the above supervisory  process, necessary  supervisory  action is taken on registered  NBFCs,  if deemed necessary.  Details  of NBFCs  registered  by  RBI from July 2017 to June 2018 are at Annexure  2. As per inputs  received  from RBI, NBFCs  against  which complaints  regarding  non-payment  of investor  money  have been received  by  RBI during  the last three  years  are as under:

1. Singhland  Investmenst  Ltd.
2. Punjab  State Industrial  Development  Corporation Ltd.
3. UK Fin Services  Ltd.
4. IL & FS
5. SIGS Financial  Services
6. Manappuram  finance  Ltd.

Annexure  1 Lok Sabha Unstarred  Question  No. 2045 for  21.12.2018 regarding  'Cancellation  of NBFCs Registration' Details of NBFCs whose CoR has been cancelled by RBI during  last two years

| S. No.   | Regional OfficeofRBI   | NumberofcancellationofCoR   |
|----------|------------------------|-----------------------------|
| 1.       | Ahmedabad              | 48                          |
| 2.       | Bengaluru              | 27                          |
| 3.       | Bhopal                 | 11                          |
| 4.       | Bhubaneswar            | 4                           |
| 5.       | Chandigarh             | 79                          |
| 6.       | Chennai                | 103                         |
| 7.       | Guwahati               | 2                           |
| 8.       | Hyderabad              | 48                          |
| 9.       | Jaipur                 | 28                          |
| 10.      | Jammu                  | 16                          |
| 11.      | Kanpur                 | 89                          |
| 12.      | Kolkata                | 617                         |
| 13.      | Mumbai                 | 190                         |
| 14.      | NewDelhi               | 203                         |
| 15.      | Patna                  | 9                           |
| 16.      | Thiruvananthapuram     | 16                          |
|          | Total                  | 1,490                       |

Source: RBI

## Annexure  2 Lok Sabha Unstarred  Question  No. 2045 for  21.12.2018 regarding  'Cancellation  of NBFCs

## Registration' Classification-wise number  of NBFCs registered from  July 2017  to June 2018

| Category                     | July 2017   | Aug 2017   | Sep 2017   | Oct 2017   | Nov 2017   | Dec 2017   | Jan 2018   | Feb 2018   | Mar 2018   | Apr 2018   | May 2018   | June 2018   |   Total |
|------------------------------|-------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|-------------|---------|
| Loan Company                 | 5           | 15         | 6          | 11         | 8          | 12         | 9          | 8          | 9          | 7          | 16         | 7           |     113 |
| Investment Company           | -           | -          | -          | -          | 2          | 1          | -          | 2          | 1          | -          | 5          | 4           |      15 |
| Core Investment Company      | -           | -          | -          | 1          | -          | -          | -          | -          | -          | -          | 2          | 1           |       4 |
| Asset Reconstruction Company | -           | -          | -          | -          | -          | -          | -          | -          | -          | 1          | -          | -           |       1 |
| Factor                       | -           | -          | -          | -          | -          | -          | -          | 1          | -          | -          | -          | -           |       1 |
| P2P                          | -           | -          | -          | -          | -          | -          | -          | -          | -          | -          | -          | 5           |       5 |
| Total                        | 5           | 15         | 6          | 12         | 10         | 13         | 9          | 11         | 10         | 8          | 23         | 17          |     139 |

Source: RBI