In a significant move towards enhancing regulatory parity and promoting ease of doing business, the Ministry of Corporate Affairs (MCA), Government of India, has issued a public notice dated June 26, 2025. This notice pertains to a proposed amendment to Rule 11(2) of the Companies (Meetings of Board and its Powers) Rules, 2014. The proposed amendment is aimed at extending regulatory exemptions currently available to Non-Banking Financial Companies (NBFCs) registered with the Reserve Bank of India (RBI) to Finance Companies registered under the International Financial Services Centres Authority (IFSCA).
Understanding the Background
Section 186 of the Companies Act, 2013 governs loans, investments, guarantees, and security made by companies. Specifically, Section 186(11)(a) provides exemptions to certain companies — particularly NBFCs registered with the RBI — from the detailed compliance requirements of Section 186 (excluding sub-section 1), provided they are engaged in lending or guaranteeing loans in the ordinary course of business.
These exemptions are crucial for the efficient functioning of NBFCs, allowing them to operate with fewer compliance hurdles in their day-to-day lending activities.
The Proposed Change
The International Financial Services Centres Authority (IFSCA) — the unified regulator for financial institutions in IFSCs like GIFT City, Gujarat — had requested the MCA to extend the same exemption to Finance Companies registered under its jurisdiction. This move is aimed at bringing IFSCA-registered Finance Companies on par with RBI-registered NBFCs in terms of regulatory treatment under the Companies Act, 2013.
Following a consultation process involving the Department of Economic Affairs (DEA), RBI, and IFSCA, the MCA has agreed to proceed with the proposal. A draft notification amending Rule 11(2) has now been prepared and made available on the Ministry’s official website www.mca.gov.in.
Why This Matters
Finance Companies operating in IFSCs like GIFT City are at the forefront of India’s ambition to create globally competitive financial hubs. By aligning their regulatory treatment with that of domestic NBFCs, this amendment will remove operational bottlenecks and encourage more institutions to set up base in IFSCs.
This amendment also reflects the government’s broader commitment to simplifying regulatory frameworks and promoting financial sector innovation in India’s special financial zones.
Stakeholder Participation Invited
As part of its transparent policy-making process, the MCA has invited public comments and suggestions on the draft notification. Stakeholders — including industry bodies, finance companies, legal experts, and corporate governance professionals — are encouraged to submit their views through the e-Consultation module on the MCA website. The last date for submitting suggestions is July 17, 2025.
