What Is Core Investment Company?
Core Investment Company is a type of NBFC which hold shares, bonds and debentures but are not allowed to trade in any of the instruments they hold.
Key features of the company are :
– Bank Deposits
– Money Market Instruments
– Government Securities
– Guarantees Issued on behalf of Group Companies
– Bonds or Debentures issued by Group Companies /Loans to Group Companies
What are types of Core Investment Company?
Basically any Core Investment Company can be categorized in one of the below mentioned types:
Documents Required For Registration As CIC
RBI mentions a comprehensive list of all the documents to register itself as CIC , nearly 52 documents are required but still that itself is not an exhaustive list, RBI may ask for other necessary documents , if required.
Regulatory framework to be followed by RBI:
Why is the need of Core Investment Company?
With all the strict conditions imposed on NBFC, if NBFC forms itself as investment firm , it needs to get itself registered under section 45-1A of the RBI Act, 1939. Now such formed firms are also scrutinized subjected to NBFC regulations, even though they do not accept any public deposits. Whereas when it comes to Core Investment Company, the requirement to be registered is little relaxed and many such companies are exempted.
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Yes, in such a case registration with bank would be required. Infact, each company of the group that are core investment company will be treated as CIC-ND-SI, provided that they have access to public funds.
The remaining 10% can either be real estate or any other fixed assets which are necessary for the proper functioning of the company, but it can not involve other financial investments or loans in companies which are not in group.
While any such account will be taken in consideration keeping the view of the fact that changes do happen on the balance sheet even after 31st March. But all NBFC’s including CIC-ND-SI would necessarily have to finalize all their accounts as on the last day of the financial year and along with that submit all their annual certificates based on the report.
| Particulars | NBFC -CIC | NBFC-ND-SI |
|---|---|---|
| Asset Size | Less than or more than 100 Crore | More than 100 Crore |
| Net Assets | >90% | >90% |
| Registration with RBI | Not Required | Required |
| Equity Shares | >60% | >60% |
| Access to Public funds | No | Yes |
