The Reserve Bank of India vide its notification dated 13th August 2020 has revised the guidelines applicable for core investment companies, which mandates more disclosures, better risk management , group structure and exceptions to carry other financial activity.
Key Highlights from the revised guidelines:
It has been announced that the number of layers of CICs within a Group (including the parent CIC) shall be restricted to two, irrespective of the extent of direct or indirect holding/ control exercised by a CIC in the other CIC.
The parent CIC in the group or the CIC with the largest asset size, in case there is no identifiable parent CIC in the group, shall constitute a Group Risk Management Committee (GRMC). The GRMC shall report to the Board of the CIC that constitutes it and shall meet at least once in a quarter.
CICs shall ensure that a policy is put in place with the approval of the Board for ascertaining the ‘fit and proper’ status of directors not only at the time of appointment but also on a continuous basis.
CICs shall prepare CFS as per provisions of Companies Act, 2013, so as to provide a clear view of the financials of the group as a whole. However, it is possible that entities that meet the definition of group as per extant regulations are not covered under consolidation due to exemptions granted as per statutory provisions/ applicable accounting standards.
Further, it has been noted that CICs with an asset size of less than ₹100 crore, irrespective of whether accessing public funds or not and with an asset size of ₹100 crore and above and not accessing public funds are not required to register with the Bank under Section 45IA of the RBI Act, 1934.
Image download link:
