<p>The Reserve Bank of India (RBI) on Thursday relaxed norms for non-banking finance companies (NBFCs) in insurance joint ventures by allowing them to hold more than 50 per cent in such companies.<br /><br /></p>.<p>“On a review, it has been decided that in cases where IRDA issues calls for capital infusion into the insurance JV company, RBI may, on a case-to-case basis, consider need-based relaxation of the 50 per cent group limit,” RBI said in a notification.<br /><br />The relaxation is subject to compliance by the NBFC with all regulatory conditions, it said.<br />IRDA often requires an insurance company to expand its capital, taking into account stipulations of the Insurance Act and its solvency requirements, RBI said.<br /><br />The limit on NBFC holdings may act as a constraint for the insurer in meeting the IRDA requirement, it added.<br /><br />As per existing norms, an NBFC cannot hold more than 50 per cent of the paid-up capital of an insurance joint venture.<br /><br />A subsidiary or company in the same group of an NBFC or of another NBFC engaged in the business of a non-banking financial institution or banking is not allowed to join the insurance company on a risk participation basis.</p>
<p>The Reserve Bank of India (RBI) on Thursday relaxed norms for non-banking finance companies (NBFCs) in insurance joint ventures by allowing them to hold more than 50 per cent in such companies.<br /><br /></p>.<p>“On a review, it has been decided that in cases where IRDA issues calls for capital infusion into the insurance JV company, RBI may, on a case-to-case basis, consider need-based relaxation of the 50 per cent group limit,” RBI said in a notification.<br /><br />The relaxation is subject to compliance by the NBFC with all regulatory conditions, it said.<br />IRDA often requires an insurance company to expand its capital, taking into account stipulations of the Insurance Act and its solvency requirements, RBI said.<br /><br />The limit on NBFC holdings may act as a constraint for the insurer in meeting the IRDA requirement, it added.<br /><br />As per existing norms, an NBFC cannot hold more than 50 per cent of the paid-up capital of an insurance joint venture.<br /><br />A subsidiary or company in the same group of an NBFC or of another NBFC engaged in the business of a non-banking financial institution or banking is not allowed to join the insurance company on a risk participation basis.</p>