A company has invested its entire funds of Rs. 1.5 Crores in the shares of its Group Companies. The company is not doing any other activity than holding these shares and these investments are made in the year 2003. Do the company is required to be registered with the RBI as NBFC. Is there is any kind of default had been incurred by this company and if so, what is the recourse available.
Your company is a "financial institution" within the meaning of Section 45-I(c) of RBI Act and needs registration as NBFC u/s 45-IA. Minimum net owned funds required for NBFC is Rs.2 crores.
You have therefore to make application to RBI for registration. If you do not want to remain as NBFC you will have to start some other business also in the company so that income from financial assets is less than 50% of its income. RBI press release dated 8.4.1999 in this regrd is attached.
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