RBI TO AMEND RULES TO CONTROL NBFCs TURNING LLPs

The Reserve Bank of India (RBI) plans to amend its rules to pre-empt non banking finance companies (NBFCs) from misusing the liberal rules governing limited liability partnership (LLP) firms. In the interim, NBFCs that want to convert themselves to LLP firms will have to obtain a no-objection certificate from the central bank. LLPs refer to a corporate structure introduced and actively promoted by the ministry of corporate affairs. They are gaining in popularity because they have easier winding up procedures and the liability of a partner is limited to the extent of his or her contribution to the LLP.