Core Investment Companies (CICs) with asset size of less than Rs.100 crore will be exempted from the requirement of registration with the Reserve Bank of India, provided 90 per cent of their total assets are in investments in shares of investee companies for the purpose of holding stake in the said investee companies, the central bank says in the draft guidelines for regulatory framework for CICs.
All CICs having an asset size of Rs.100 crore or more will be considered as systemically important non-deposit accepting core investment companies (CICs-ND-SI) and would be required to obtain the certificate of registration from the RBI, even if they have been advised in the past that registration was not required. Ninety per cent of the total assets of CICs-ND-SI should be in investments in equity, debt, or loans in group companies, provided that the investment in equity shares of group companies for the purpose of holding stake in these companies is not less than 60 per cent of total assets;
CICs, including CICs-ND-SI, should not trade in shares except for block sale to dilute or divest the holding; should not accept or hold public deposits; and should not carry on any other financial activities referred to in Section 45 I (c) and 45 I(f) of the Act, ibid, except investments in bank deposits, government securities, loans to and investments in debt issuances of group companies, or guarantees issued on behalf of group companies;
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Every CIC-ND-SI shall ensure that at all times it maintains a minimum capital ratio whereby its adjusted net worth shall not be less than 30 per cent of its aggregate risk weighted assets on balance sheet and risk adjusted value of off balance sheet items as on the date of the last audited balance sheet. The outside liabilities of a CIC-ND-SI shall not exceed 2.5 times of its adjusted net worth calculated as on the date of the last audited balance sheet;
The RBI evolved draft guidelines as it had been receiving requests from companies and further in view of the systemic implications of access to public funds by CICs. The RBI stated that comments and suggestions may be sent to the central bank within 15 days of hosting of the guidelines for consideration of the RBI.