RBI constitutes panel to review Core Investment Companies

Reserve Bank of India (RBI) constituted a working group to review regulatory guidelines and supervisory framework for Core Investment Companies (CIC). The 6-member working group is chaired by Tapan Ray, non-executive chairman, Central Bank of India and former Secretary in Union Ministry of Corporate Affairs (MCA).

Key Highlights

Background: In August 2010, Central Bank on recognising the difference in business model of a holding company relative to other Non-Banking Financial Companies (NBFCs) had introduced a separate framework for regulation of systemically important.

RBI’s Objective behind forming Panel

Country’s Corporate Group structures have become more complex over the years. It now involves multiple layering and leveraging, which has further led to greater inter-connectedness with financial system through their access to public funds. Also, in light of recent developments, there is a need to strengthen corporate governance framework of CICs.

Troubled financial conglomerate Infrastructure Leasing and Financial Services (IL&FS) is registered with RBI as a CIC.

Terms of Reference for Panel

It will examine current regulatory framework for CICs in terms of efficacy, adequacy and effectiveness and will also suggest changes.

It will also suggest measures to strengthen corporate governance and disclosure requirements for CICs as well as measures to enhance RBI’s on-site supervision and off-sight surveillance over CICs.

To assess adequacy of supervisory returns submitted by CICs and also suggest changes.

Timeframe: Working Group must submit its report by 31 October 2019

Month: Current Affairs - July, 2019