The Reserve Bank of India (RBI), on Monday, said that any core investment company (CIC) registered with it needs minimum Rs.500 crore owned funds to set up a joint venture company for undertaking insurance business.
Non-performing assets
Among other norms, the RBI said that the level of net non-performing assets shall be not more than 1 per cent of total advances.
Further, it should have registered net profit continuously for three consecutive years, and “the track record of the performance of the subsidiaries, if any, of the CIC concerned should be satisfactory,” RBI said in a notification.
Adjusted net worth
These companies are required to maintain adjusted net worth which would be not less than 30 per cent of aggregate risk-weighted assets on balance sheet and risk adjusted value of off-balance sheet items.
The RBI said that no CIC would be allowed to conduct such business departmentally.
“Further, an NBFC (in its group / outside the group) would normally not be allowed to join an insurance company on risk participation basis, and, hence, should not provide direct or indirect financial support to the insurance venture.”
Within the group, the apex bank said, CICs may be permitted to invest up to 100 per cent of the equity of the insurance company either on a solo basis or in joint venture with other non-financial entities in the group. In case where a foreign partner contributes 26 per cent of the equity, more than one CIC may be allowed to participate in the equity of the insurance joint venture.
CICs cannot enter insurance business as agents and companies that wish to participate in insurance business as investors or on risk participation basis will be required to obtain prior approval of the central bank.
