The Reserve bank of India vide notification dated 6th November 2019, has released the report of the Working Group to review the regulatory and supervisory framework for Core Investment Companies (CIC) and invited public comments by 30th November 2019.
The Working Group was constituted by RBI on 3rd July 2019 to examine the current regulatory and supervisory framework for CIC with a view to identify and suggest measures for limiting the risks posed by the CICs.
The key recommendations of the Working Group are as follows:
- The capital contribution by a CIC in a step-down CIC, over and above 10 per cent of its owned funds, should be deducted from its adjusted net worth, as applicable to other NBFCs.
- Step-down CICs should not be permitted to invest in any other CIC. However, it can invest freely in other group companies.
- Number of layers of CICs in a group should be limited to two.
- Every Group having a CIC should have a Group Risk Management Committee (GRMC).
- Board level committees: audit committee, nomination and remuneration committee and group risk management committee, should be constituted.
- RBI may design and prescribe Offsite returns on the lines of other NBFCs. Annual SAC submission may also be stipulated.
- Onsite inspection of the CICs may be conducted periodically.
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