RBI tightens norms for core investment companies

Mumbai: The Reserve Bank of India (RBI) on Thursday tightened the norms for core investment companies (CICs), based on the recommendations received from the working group which was formed to review the framework. The working group also received feedback from all the stakeholders.

The central bank said that while computing Adjusted Net Worth (ANW), the amount representing any direct or indirect capital contribution made by one CIC in another CIC, to the extent such amount exceeds ten per cent of owned funds of the investing CIC, will be deducted.

It also restricted the number of layers of CICs within a Group, including the parent CIC) to two, in order to address the complexity in group structures and existence of multiple CICs within a group.

It also stipulated that 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, will constitute a Group Risk Management Committee (GRMC), to analyse the material risks to which the group, its businesses and subsidiaries are exposed.

RBI said the corporate governance requirements for CICs will be as per the Companies Act, 2013, and said these companies should 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.

The central bank said the CICs should 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.

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