Monday, July 15, 2013

Guidelines on raising money through Private Placement by NBFCs

The Reserve Bank of India (RBI) has issued guidelines on private placement by NBFCs. The details are as follows:-

  • The offer document for private placement should be issued within a maximum period of 6 months from the date of the Board Resolution authorizing the issue.
  • The offer document may be printed or typed "For Private Circulation Only".
  • An NBFC shall only issue debentures for deployment of funds on its own balance sheet and not to facilitate resource requests of group entities/ parent company / associates.
  • Private placement by all NBFCs shall be restricted to not more than 49 investors, identified upfront by the NBFC.
  • The minimum subscription amount for a single investor shall be Rs 25 lakh and in multiples of Rs10 lakh thereafter.
  • There should be a minimum time gap of at least six months between two private placements.
  • An NBFC shall not extend loans against the security of its own debentures.


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