RBI MANDATES TRUST DEED AT NBFCs
Deposits with Non-Banking Finance Companies (NBFCs) will now be secured to the extent of statutory liquid assets through a trust deed in favour of depositors. This implies that NBFCs can no longer avail of the regulatory arbitrage by parking 15% of their deposits as a floating charge on these reserves only at the time of periodic inspections or during year-end, and subsequently deploy these funds for varied purposes later on. As per Reserve Bank of India (RBI) notification, the charge will have to be registered with the Registrar of Companies. The trustee would necessarily have to be either a limited company or a scheduled commercial bank, which is engaged in the trust business and has a minimum capital base of Rs. 50 lakh. The trustee needs to be independent, having no relationship with the company or its principal shareholders. RBI has necessitated that trustees would need to be entirely responsible for the protection of depositors’ interests.