Revised Framework for Core Investment Companies

 The Reserve Bank of India (‘RBI’) vide its circular dated August 13, 2020 has revised the regulatory framework applicable to core investment companies (‘CICs’)  in order to ensure stability of the financial system and address systemic risks posed by CICs and their group companies.

CICs are non-banking financial company holding not less than 90% of their net assets as investments in equity shares, preference shares, bonds, debentures, debt or loans in group companies. Its investments in equity shares in group companies constitute a minimum of 60% of its net assets.

RBI had constituted a Working Group (WG) to Review Regulatory and Supervisory Framework for CICs, on July 03, 2019, with Shri Tapan Ray, former Secretary, Ministry of Corporate Affairs, GoI as the Chairperson. Based on the key recommendations provided by the WG, the revised framework has now been issued by RBI.

The key takeaways from the revised guidelines are as follows:

This Article has been Compiled by Charu Jhamtani (Associate)

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