Latest Expert Exchange Queries

GST Demo Service software link: https://ims.go2customer.com
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft info@binarysoft.com
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
 
 
 
 
Popular Search: VAT RATES :: cpt :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ACCOUNTING STANDARDS :: due date for vat payment :: empanelment :: Central Excise rule to resale the machines to a new company :: TAX RATES - GOODS TAXABLE @ 4% :: VAT Audit :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: list of goods taxed at 4% :: TDS :: form 3cd :: ACCOUNTING STANDARD :: articles on VAT and GST in India
 
 
« Latest Circulars »
 Investment by Foreign Portfolio Investors in Corporate Debt Securities – Review
 RBI-Issuance of Rupee Denominated Bonds (RDBs) Overseas
 Inclusion of “Suryoday Small Finance Bank Limited” in the Second Schedule to the Reserve Bank of India Act, 1934
  Trade Repository for OTC Foreign Exchange and Interest Rate Derivatives
 RBI to regulate peer-to-peer lending firms
  Export Data Processing and Monitoring System (EDPMS) Issuance of Electronic Bank Realisation Certificate (eBRC)
 Export Data Processing and Monitoring System (EDPMS) Issuance of Electronic Bank Realisation Certificate (eBRC)
 Auction for Sale (Re-issue) of Government Stock (GS)
 RBI-Auction of Government of India Dated Securities September 18, 2017
 RBI releases Handbook of Statistics on the Indian Economy 2016-17
 Sources of Variation in Foreign Exchange Reserves in India during April-June 2017

RBI-Investment through Alternative Investment Funds Clarification on Calculation of NOF of an NBFC
April, 08th 2014

RBI/2013-14/554
DNBS (PD) CC.No.373/03.10.001/2013-14

April  7, 2014

All NBFCs

Dear Sirs,

Investment through Alternative Investment Funds – Clarification on Calculation of NOF of an NBFC

In terms of section 45 IA of the RBI Act, 1934, net owned funds (NOF) of an NBFC means-

(a) the aggregate of the paid-up equity capital and free reserves as disclosed in the latest balance-sheet of the company after deducting there from–

(i) accumulated balance of loss; 
(ii) deferred revenue expenditure; and 
(iii) other intangible assets; and

(b) further reduced by the amounts representing

(1) investments of such company in shares of–

(i) its subsidiaries; 
(ii) companies in the same group;
(iii) all other non-banking financial companies; and

(2) the book value of debentures, bonds, outstanding loans and advances (including hire-purchase and lease finance) made to, and deposits with,–

(i) subsidiaries of such company; and 
(ii) companies in the same group,

to the extent such amount exceeds ten per cent of (a) above.

2. It has been observed in certain cases that an NBFC while arriving at the NOF figure did not reckon its investment in group companies on the ground that investments in the group companies were made by the Venture Capital Fund (VCF) sponsored by the NBFC, although, in term, the contribution to the funds held by the VCF had come primarily from the NBFC itself. 

 

3. As you are aware, a VCF or any such Alternative Investment Fund (AIF)1 means a pool of capital by investors and the investment made by such an AIF is done on behalf of the investors. Accordingly, it is clarified that while arriving at the  NOF figure, investment made by an NBFC in entities of the same group concerns shall be treated alike, whether the investment is made directly or through an AIF / VCF, and when the funds in the VCF  have come from the NBFC to the extent of 50% or more; or where the beneficial owner, in the case of Trusts is the NBFC, if 50% of the funds in the Trusts are from the concerned NBFC. For this purpose, “beneficial ownership” would mean holding the power to make or influence decisions in the Trust and being the recipient of benefits arising out of the activities of the Trust. 

4. In other words, in arriving at the NOF, the substance would take precedence over form. NBFCs are advised to keep this principle in mind, always, while calculating their NOF.

Yours faithfully,

(N. S. Vishwanathan)
Principal Chief General Manager



1As defined in ‘SECURITIES AND EXCHANGE BOARD OF INDIA (ALTERNATIVE INVESTMENT FUNDS) REGULATIONS, 2012’

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Content Management System development CMS development Content Management Solutions CMS Solutions Content Management Services CMS Services CMS Software

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions