New Delhi, Feb 05: RBI today said non-banking finance companies(NBFCs) not having the minimum net-owned fund(NoF) of Rs 25 lakh as on January 9 will not be allowed to continue with their business. “NBFCs, which have not achieved the minimum NoF of Rs 25 lakh by January 9, 2003, are not entitled to continue the business of a non-banking financial institution beyond that date notwithstanding that the application of such a company for certificate of registration is pending with reserve bank of India," the banking regulator said in a statement here.
RBI said the decision, under the section 45-ia of its act, was yet to be communicated to the NBFCs.
However, NBFCs, which had achieved the minimum NoF of Rs 25 lakh could carry on with their business until a certificate of registration was issued or rejection of application for registration was communicated to them, the statement said.
Giving a stern warning, RBI said if any person contravene the provisions, he shall be punishable with imprisonment for a term which shall not be less than one year but extending to five years with a fine of not less than Rs one lakh extending to Rs five lakh.
Bureau Report