JOIN USTo ensure 'fit and proper' character of the management of non-banking financial companies (NBFCs), the RBI on Monday said any takeover or acquisition control of such an entity would now require its prior approval in writing.
"The prior written permission of the RBI shall be required for any takeover or acquisition of control of an NBFC, whether by acquisition of shares or otherwise," the central bank said in a notification.
Also, any merger or amalgamation of an NBFC with another entity or any merger or amalgamation of an entity with an NBFC that would give the acquirer/another entity control of the NBFC would require permission from the RBI.
The RBI said any merger or amalgamation of an NBFC with another entity or any merger or amalgamation of an entity with an NBFC which would result in acquisit-ion/transfer of shareholding in excess of 10 per cent of the paid up capital of the NBFC, would also need its approval.
The RBI directions, known as ‘NBFCs (Approval of Acquisition or Transfer of Control) Directions, 2014, would be applicable to every NBFCs.