Reserve Bank of India RBI Act, 1934 – Important Detailed Decoded Version – Part V

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RBI ACT, 1934 — Part V

RBI Act, 1934 – Sections 45H to 45P

This is the NBFC/non-banking institution regulatory block. For exam or interview purposes, don’t read it casually—45-IA, 45-IB, 45-IC, 45-ID, 45-IE, 45-JA, 45-MB, 45-MBA and 45-MC are particularly important.

CHAPTER III-B

Provisions relating to Non-Banking Institutions receiving deposits and Financial Institutions

45H. Chapter IIIB not to apply in certain cases

Chapter IIIB does not apply to:

  • State Bank;
  • banking company under Section 5 of Banking Regulation Act, 1949;
  • corresponding new bank;
  • subsidiary bank;
  • Regional Rural Bank;
  • co-operative bank;
  • primary agricultural credit society;
  • primary credit society.

Proviso

For this Chapter, Tamil Nadu Industrial Investment Corporation Limited is not treated as a banking company.

Exam takeaway

Chapter IIIB is primarily the non-banking institution/NBFC regulatory framework, with specified exclusions.

45I. Definitions

45I(a) — Business of a non-banking financial institution

Means carrying on the business of a financial institution referred to in clause (c).

It also includes business of an NBFC referred to in clause (f).

45I(aa) — Company

“Company” means a company under Section 3 of the Companies Act, 1956.

It also includes a foreign company under Section 591 of that Act.

45I(b) — Corporation

A corporation incorporated by an Act of any legislature.

45I(bb) — Deposit

This is an important definition.

“Deposit” includes and is deemed always to have included:

any receipt of money by way of deposit, loan or in any other form.

But certain amounts are excluded.

45I(bb)(i)

Amounts raised by way of:

share capital

are not deposits.

45I(bb)(ii)

Capital contributed by partners of a firm is not a deposit.

45I(bb)(iii)

Amounts received from:

  • scheduled bank;
  • co-operative bank;
  • other banking company under Section 5(c), Banking Regulation Act,

are excluded.

45I(bb)(iv)

Amounts received from specified financial institutions are excluded, including:

  • State Financial Corporation;
  • financial institutions specified under Section 6A of the Industrial Development Bank of India Act;
  • other institutions specified by RBI.

45I(bb)(v)

Amounts received in the ordinary course of business as:

(a) security deposit
(b) dealership deposit
(c) earnest money
(d) advance against orders for goods, property or services

are excluded.

45I(bb)(vi)

Amount received from:

  • an individual, or
  • a firm, or
  • an association of individuals which is not a body corporate,

registered under a State money-lending law, is excluded.

45I(bb)(vii)

Amounts received as subscriptions relating to a:

chit

are excluded.

Explanation I

“Chit” has the meaning assigned to it under Section 2(b) of the Chit Funds Act, 1982.

Explanation II

Credit given by a seller to a buyer on sale of property, whether movable or immovable, is not a deposit.

Explanation III

Amounts accepted by a co-operative society from members/shareholders are treated as deposits if:

  • they are not share capital; and
  • the members/shareholders are nominal or associate members without full voting rights.

🔥 Exam trap

The word “deposit” is much wider than ordinary bank-deposit language. Then the section carves out specific exclusions.

45I(c) — Financial institution

A non-banking institution carrying on, wholly or partly, any of these activities:

45I(c)(i)

Financing any activity other than its own, through:

  • loans;
  • advances; or
  • otherwise.

45I(c)(ii)

Acquiring:

  • shares;
  • stocks;
  • bonds;
  • debentures;
  • Government/local-authority securities;
  • other similar marketable securities.

45I(c)(iii)

Letting/delivering goods to a hirer under a hire-purchase agreement.

45I(c)(iv)

Carrying on any class of insurance business.

45I(c)(v)

Managing/conducting/supervising as:

  • foreman;
  • agent; or
  • otherwise,

chits/kuries or similar businesses.

45I(c)(vi)

Collecting money through:

  • subscriptions;
  • sale of units;
  • other instruments;
  • other schemes/arrangements,

and then:

  • awarding prizes/gifts; or
  • distributing/disbursing money to persons from whom it was collected or others.

But the definition excludes institutions whose principal business is:

(a) agricultural operations;

(aa) industrial activity;

(b) purchase/sale of goods other than securities or provision of services;

(c) purchase, construction or sale of immovable property, provided no part of income comes from financing such activities of others.

Explanation — industrial activity

“Industrial activity” means activity specified in Section 2(c)(i)–(xviii) of the Industrial Development Bank of India Act, 1964.

45I(d) — Firm

A firm as defined in the Indian Partnership Act, 1932.

45I(e) — Non-banking institution

Means:

company, corporation or co-operative society.

45I(f) — Non-banking financial company

Means:

45I(f)(i)

A financial institution which is a company.

45I(f)(ii)

A non-banking institution which:

  • is a company; and
  • has as its principal business:
    • receiving deposits under any scheme/arrangement/other manner; or
    • lending in any manner.

45I(f)(iii)

Such other non-banking institution or class of institutions as RBI may specify:

  • with previous Central Government approval, and
  • through notification in the Official Gazette.

45-IA. Requirement of registration and net owned fund

45-IA(1)

No NBFC can commence or carry on NBFC business unless it has BOTH:

45-IA(1)(a)

A Certificate of Registration (CoR) issued under this Chapter.

45-IA(1)(b)

Required Net Owned Fund (NOF).

The Act specifies ₹25 lakh, or such higher amount as RBI may notify, subject to the statutory ceiling in the provision. The uploaded text records the 2019 substitution allowing an amount up to ₹100 crore.

🔥 Core formula

NBFC business = CoR + required NOF

45-IA(2)

Every NBFC must apply to RBI for registration:

  • in the form specified by RBI.

Proviso — existing NBFCs in 1997

An NBFC existing when the 1997 amendment commenced had to apply within:

6 months

and could continue business until:

  • CoR was issued, or
  • rejection was communicated.

45-IA(3)

Existing NBFCs at commencement of the 1997 amendment having NOF below ₹25 lakh could continue business to achieve the NOF requirement:

45-IA(3)(i)

For:

3 years

from commencement.

45-IA(3)(ii)

RBI could extend the period further:

  • reasons must be recorded in writing;
  • company must inform RBI within 3 months after fulfilling the NOF requirement.

Proviso

Total continuation period could never exceed 6 years.

45-IA(4) — Conditions for registration

RBI can inspect books or otherwise satisfy itself that:

(a)

NBFC can/will be able to pay present and future depositors in full when claims become due.

(b)

Its affairs are not being/likely to be conducted detrimentally to present/future depositors.

(c)

Management/proposed management is not prejudicial to:

  • public interest; or
  • depositors’ interests.

(d)

It has:

adequate capital structure and earning prospects.

(e)

Granting registration serves:

public interest.

(f)

Granting registration is not prejudicial to:

  • operation and consolidation of financial sector;
  • monetary stability;
  • economic growth;
  • other relevant factors specified by RBI through Gazette notification.

(g)

Any other condition RBI considers necessary to ensure that the company’s business is not prejudicial to:

  • public interest; or
  • depositors’ interests.

45-IA(5)

After RBI is satisfied that 45-IA(4) conditions are fulfilled:

RBI may grant the Certificate of Registration, subject to conditions it considers fit.

45-IA(6) — Cancellation of CoR

RBI may cancel the CoR if the NBFC:

(i)

Ceases NBFC business in India.

(ii)

Fails to comply with a condition attached to CoR.

(iii)

Fails to fulfil any condition under 45-IA(4)(a)–(g).

(iv)

Fails:

(a) to comply with RBI directions under Chapter IIIB;

(b) to maintain accounts as required by law/RBI direction/order;

(c) to produce/offer books and relevant documents for inspection when demanded.

(v)

Has been prohibited by RBI from accepting deposits and that prohibition has remained in force for at least:

3 months.

First proviso

Before cancellation for failure under clause (ii) or (iii), RBI generally must give the NBFC an opportunity to take corrective steps.

Exception:

RBI need not wait if delay would prejudice public interest, depositors, or the NBFC itself.

Second proviso

Before cancellation:

reasonable opportunity of being heard must be given.

45-IA(7) — Appeal

A company aggrieved by:

  • rejection of registration application, or
  • cancellation of CoR

may appeal to the Central Government within:

30 days

from communication of the order.

If appeal is filed:

Central Government’s decision is final.

If no appeal is filed:

RBI’s decision is final.

Proviso

Before rejecting an appeal, the company must get a:

reasonable opportunity of being heard.

45-IA Explanation — Net Owned Fund

45-IA Explanation(I)(a)

Start with:

Paid-up equity capital + free reserves

as shown in latest balance sheet.

Then deduct:

(i)

Accumulated loss.

(ii)

Deferred revenue expenditure.

(iii)

Other intangible assets.

45-IA Explanation(I)(b)

Further reduce the amount by:

(1) Investments in shares of:

(i) its subsidiaries;

(ii) companies in same group;

(iii) all other NBFCs.

(2)

Book value of:

  • debentures;
  • bonds;
  • outstanding loans and advances, including hire-purchase and lease finance;
  • deposits

made with:

(i) subsidiaries;
(ii) companies in same group,

to the extent the amount exceeds:

10% of the amount under 45-IA Explanation(I)(a).

Explanation II

“Subsidiaries” and “companies in the same group” have the meanings assigned under the Companies Act specified in the provision.

45-IB. Maintenance of percentage of assets

45-IB(1)

Every NBFC must invest and continue to invest in India in:

unencumbered approved securities

valued at not more than their current market price.

Minimum:

5% of deposits outstanding

as at close of business on the last working day of the second preceding quarter.

RBI can increase this percentage up to:

25%.

Proviso

RBI may prescribe different percentages for different classes of NBFCs.

45-IB(2)

RBI may require NBFCs to submit returns to verify compliance:

  • in specified form;
  • manner;
  • period.

45-IB(3) — Penal interest

If investment falls below the prescribed percentage:

First shortfall

Penal interest:

3% p.a. above Bank Rate

on the shortfall.

Continuing shortfall

For each subsequent quarter:

5% p.a. above Bank Rate.

45-IB(4)(a)

Penal interest must be paid within:

14 days

of RBI’s demand notice.

If unpaid, RBI may apply to the principal civil court having jurisdiction where the NBFC has an office.

45-IB(4)(b)

Court issues a certificate specifying amount payable.

It is enforceable like:

a decree of the court.

45-IB(5)

If RBI is satisfied that the NBFC had sufficient cause for non-compliance:

RBI may not demand penal interest.

45-IB Explanation

(i) Approved securities

Includes:

  • securities of Central Government;
  • securities of State Government;
  • bonds whose principal and interest are fully and unconditionally guaranteed by such Government.

(ii) Unencumbered approved securities

Includes approved securities lodged with another institution for an advance/arrangement to the extent they have not been drawn against, availed of or otherwise encumbered.

(iii) Quarter

Means a 3-month period ending on:

  • 31 March
  • 30 June
  • 30 September
  • 31 December.

45-IC. Reserve Fund

45-IC(1)

Every NBFC must create a Reserve Fund.

Every year it must transfer:

not less than 20% of net profit

to that Reserve Fund.

This transfer must happen:

before declaring any dividend.

🔥 Very important

NBFC Reserve Fund = minimum 20% of net profit, before dividend.

45-IC(2)

No amount can be withdrawn/appropriated from the Reserve Fund except for purposes specified by RBI.

Every withdrawal must be reported to RBI within:

21 days.

Proviso

RBI may:

  • extend the 21-day period for sufficient cause; or
  • condone delay.

45-IC(3)

Central Government may declare that 45-IC(1) will not apply to an NBFC:

  • on RBI’s recommendation;
  • considering adequacy of paid-up capital/reserves relative to deposit liabilities;
  • through written order;
  • for a specified period.

Proviso

Such exemption cannot be granted unless:

Reserve Fund + Share Premium Account ≥ Paid-up Capital.

45-ID. Power of Bank to remove directors from office

45-ID(1)

RBI may remove a director of an NBFC, other than a Government-owned NBFC, if RBI considers it necessary:

  • in public interest;
  • to protect depositors/creditors;
  • to protect financial stability; or
  • to secure proper management.

RBI must:

  • issue an order;
  • record reasons in writing;
  • specify effective date.

45-ID(2)

Normally, the director must receive a:

reasonable opportunity to make a representation.

Proviso

If delay may harm the company/depositors, RBI can temporarily direct that the director:

(a) cannot act as director;

(b) cannot directly/indirectly participate in management,

pending consideration of the representation.

45-ID(3)

Once removed:

  • person ceases to be director;
  • cannot directly/indirectly participate in management of any NBFC,

for the period specified:

maximum 5 years at a time.

45-ID(4)

RBI may appoint a suitable person to replace the removed director.

45-ID(5)(a)

The RBI-appointed person:

  • holds office during RBI’s pleasure;
  • normally for a period not exceeding 3 years;
  • further periods can also be up to 3 years at a time.

45-ID(5)(b)

The appointed person is protected from obligation/liability merely because of being a director for acts/omissions done in good faith in performing official duties.

45-ID(6)

Removed director:

cannot claim compensation for loss/termination of office.

45-IE. Supersession of Board of Directors of NBFC

Applies to NBFCs other than Government companies.

45-IE(1)

RBI may supersede the Board if necessary for:

  • public interest;
  • protecting depositors/creditors/company;
  • proper management;
  • financial stability.

Reasons must be recorded in writing.

Maximum total supersession period:

5 years.

🔥 Difference

45-ID → remove individual director

45-IE → supersede entire Board

45-IE(2)

After supersession, RBI may appoint an:

Administrator

for a period RBI determines.

45-IE(3)

RBI can issue directions to Administrator.

Administrator:

must follow RBI’s directions.

45-IE(4)

Once Board is superseded:

(a)

Chairman, Managing Director and other directors:

vacate office immediately.

(b)

All powers, functions and duties of the Board/general meeting that can legally be exercised are exercised by:

Administrator

until Board is reconstituted.

45-IE(5)(a)

RBI may create a committee of:

3 or more members

with experience in:

  • law;
  • finance;
  • banking;
  • administration;
  • accountancy.

Its purpose:

assist the Administrator.

45-IE(5)(b)

RBI specifies:

  • meeting times;
  • places;
  • procedure.

45-IE(6)

Salary and allowances of:

  • Administrator;
  • committee members

are specified by RBI and paid by the concerned NBFC.

45-IE(7)

Before expiry of the supersession period, Administrator must facilitate:

reconstitution of the Board.

45-IE(8)

No person is entitled to compensation for:

loss or termination of office.

45-IE(9)

Administrator vacates office:

immediately after the Board is reconstituted.

45J. Regulation/prohibition of prospectus or advertisement soliciting deposits

If RBI considers it necessary in the:

public interest

RBI may, by general/special order:

45J(a)

Regulate or prohibit an NB institution from issuing:

  • prospectus; or
  • advertisement

soliciting public deposits.

45J(b)

If not prohibited, RBI may specify conditions under which the prospectus/advertisement may be issued.

45JA. Power of Bank to determine policy and issue directions

45JA(1)

RBI may determine policy and issue directions to NBFCs if necessary/expedient for:

  • public interest;
  • regulation of financial system to its advantage;
  • preventing affairs detrimental to depositors;
  • preventing affairs prejudicial to the NBFC itself.

Directions can cover:

  • income recognition;
  • accounting standards;
  • provisions for bad/doubtful debts;
  • capital adequacy based on risk weights;
  • credit conversion factors for off-balance-sheet items;
  • deployment of funds.

The NBFC must follow the policy/directions.

45JA(2)

RBI may specifically direct NBFCs regarding:

(a)

Purposes for which:

advances or other fund-based/non-fund-based accommodation may not be made.

(b)

Maximum amount of:

  • advances;
  • financial accommodation;
  • investment in shares/securities,

that an NBFC may make to:

  • any person;
  • any company;
  • group of companies,

considering its:

  • paid-up capital;
  • reserves;
  • deposits;
  • other relevant factors.

45K. Power to collect information regarding deposits and give directions

45K(1)

RBI can require every non-banking institution to provide:

  • statements;
  • information;
  • particulars

relating/connected to deposits.

RBI specifies:

  • form;
  • frequency;
  • time limit.

45K(2)

Such information may cover:

  • amount of deposits;
  • purposes for which deposits are received;
  • periods;
  • interest rates;
  • other terms and conditions.

45K(3)

If necessary in public interest, RBI may give directions concerning deposits, including:

  • interest rates payable;
  • period for which deposits may be accepted.

45K(4)

If a non-banking institution fails to comply with RBI’s direction:

RBI may prohibit it from accepting deposits.

45K(5)

[OMITTED] by the 1974 amendment.

45K(6)

Every deposit-taking non-banking institution must, if RBI requires and within the specified time, send at its own cost a copy of:

  • annual balance sheet;
  • profit & loss account; or
  • other annual accounts

to every depositor from whom it holds deposits above the amount specified by RBI as at the last day of the relevant year.

45L. Power to call for information from financial institutions and give directions

45L(1)

If RBI considers it necessary to regulate the country’s credit system to its advantage, it may:

45L(1)(a)

Require financial institutions, generally or individually, to provide:

  • statements;
  • information;
  • particulars

about their business in the:

  • specified form;
  • specified intervals;
  • specified time.

45L(1)(b)

Give directions regarding:

conduct of business by financial institutions.

45L(2)

Information may concern:

  • paid-up capital;
  • reserves;
  • other liabilities;
  • investments;
  • Government securities;
  • persons receiving finance;
  • purposes;
  • periods;
  • terms and conditions;
  • interest rates.

45L(3)

When issuing directions, RBI must consider:

  • conditions in which the institution was established;
  • its objects;
  • statutory responsibilities;
  • likely effect of its business on money and capital-market trends.

45M. Duty of non-banking institutions

Every non-banking institution has a duty to:

  • furnish statements/information/particulars demanded by RBI;
  • comply with directions issued under Chapter IIIB.

Simple

RBI asks → NB institution must provide/comply.

45MA. Powers and duties of auditors

45MA(1)

An auditor of a non-banking institution must inquire whether the institution has furnished RBI the required statements/information/particulars relating to deposits.

If not satisfied that they have been furnished:

auditor must report to RBI and state the aggregate amount of deposits held by the institution.

45MA(1A)

RBI may, if necessary in:

  • public interest;
  • depositors’ interest; or
  • proper assessment of books,

issue directions to:

  • NBFC;
  • class of NBFCs;
  • NBFCs generally;
  • auditors.

Directions may relate to:

  • balance sheet;
  • profit & loss account;
  • disclosure of liabilities;
  • related matters.

45MA(2)

If an auditor has made/intends to make a report to RBI under 45MA(1), the auditor must include the contents of that report in the auditor’s report under the relevant Companies Act provision.

45MA(3)

RBI may order a special audit of an NBFC’s accounts if necessary in:

  • public interest;
  • interest of NBFC;
  • interest of depositors.

The audit may cover:

  • specified transaction/class of transactions;
  • specified period(s).

RBI may appoint auditor(s) and require the report to be submitted to RBI.

45MA(4)

Auditor remuneration fixed by RBI, considering:

  • nature/volume of work;
  • audit expenses/incidental expenses,

is paid by:

the NBFC being audited.

45MAA. Power to take action against auditors

If an auditor fails to comply with RBI’s direction/order under Section 45MA:

RBI may remove or debar that auditor from acting as auditor of RBI-regulated entities.

Maximum period:

3 years at a time.

45MB. Power to prohibit acceptance of deposits and alienation of assets

45MB(1)

If an NBFC:

  • violates any provision; or
  • fails to comply with an RBI direction/order under Chapter IIIB,

RBI may prohibit it from:

accepting any deposit.

45MB(2)

Once an order prohibiting deposits has been issued, RBI may, if necessary in:

  • public interest; or
  • depositors’ interest,

direct the NBFC not to:

  • sell;
  • transfer;
  • create charge;
  • mortgage;
  • otherwise deal with

its property/assets without prior written RBI permission.

Maximum period:

6 months from the date of the order.

45MBA. Resolution of non-banking financial company

This was inserted in 2019.

45MBA(1)

After inspecting an NBFC’s books, RBI may frame a scheme if satisfied that it is necessary:

  • in public interest;
  • for financial stability;
  • to continue activities critical to functioning of the financial system.

The scheme may provide for:

(a)

Amalgamation with another non-banking institution.

(b)

Reconstruction of the NBFC.

(c)

Splitting the NBFC into different units/institutions and placing:

  • viable business separately;
  • non-viable business separately,

to preserve critical financial-system activities.

For this purpose, the scheme may establish:

“Bridge Institutions.”

Explanation — Bridge Institutions

Temporary institutional arrangements created under the scheme to preserve continuity of activities of an NBFC that are critical to the financial system.

45MBA(2)

The resolution scheme may additionally provide for:

(a)

Reduction of pay/allowances of:

  • CEO;
  • Managing Director;
  • Chairman;
  • senior-management officers.

(b)

Cancellation of all/some shares held by:

  • CEO;
  • MD;
  • Chairman;
  • senior-management officer;
  • their relatives.

(c)

Sale of any assets of the NBFC.

45MBA(3)

Persons whose:

  • pay/allowances are reduced, or
  • shares are cancelled

under the scheme:

cannot claim compensation.

🔥 Concept

45MBA = RBI resolution tool for a troubled NBFC, including amalgamation, reconstruction, splitting and bridge institutions.

45MC. Power of Bank to file winding-up petition

45MC(1)

RBI may apply for winding-up of an NBFC under the Companies Act if:

(a)

NBFC is:

unable to pay its debt.

(b)

It becomes disqualified to carry on NBFC business under Section 45-IA.

(c)

RBI has prohibited it from accepting deposits and that prohibition has continued for:

at least 3 months.

(d)

Its continuation is detrimental to:

  • public interest; or
  • depositors’ interest.

45MC(2) — When is NBFC deemed unable to pay debt?

An NBFC is deemed unable to pay its debt if:

  1. it refuses/fails to meet a lawful demand;
  2. the demand is made at one of its offices/branches;
  3. it does not meet the demand within:

5 working days;

and

  1. RBI certifies in writing that the NBFC is unable to pay its debt.

🔥 Number

5 working days

45MC(3)

A copy of every winding-up application made by RBI must be sent to:

Registrar of Companies.

45MC(4)

Companies Act provisions relating to winding up apply to winding-up proceedings initiated on RBI’s application.

45N. Inspection

45N(1)

RBI may at any time order inspection by:

  • RBI officers/employees; or
  • other persons designated as inspecting authority.

45N(1)(i)

Inspection of any non-banking institution, including financial institutions, may be made to:

  • verify correctness/completeness of information submitted to RBI; or
  • obtain information that the institution failed to furnish after being asked.

45N(1)(ii)

RBI may inspect a non-banking institution which is a financial institution if RBI considers it:

necessary or expedient.

45N(2)

Every:

  • director;
  • committee member;
  • person managing the institution;
  • officer;
  • employee

must produce:

  • books;
  • accounts;
  • documents;

and furnish required business statements/information within the time specified by inspecting authority.

45N(3)

Inspecting authority may examine such persons:

on oath

regarding the institution’s business.

45NA. Deposits not to be solicited by unauthorised person

No person may solicit public deposits on behalf of an NB institution through:

  • prospectus;
  • advertisement;
  • any other manner,

unless:

(a)

He has written authorisation from the institution and states the name of the institution that authorised him.

(b)

The prospectus/advertisement complies with:

  • RBI order under Section 45J; and
  • other applicable law.

Simple

No authorisation + no compliant advertisement = no lawful deposit solicitation.

45NAA. Power in respect of group companies

45NAA(1)

RBI may direct an NBFC to:

  • annex statements to its financial statements; or
  • furnish them separately,

regarding the business/affairs of its group companies.

RBI can specify:

  • time;
  • intervals;
  • information required.

45NAA(2)

Notwithstanding the Companies Act, 2013:

RBI may inspect or audit a group company’s business and books of account.

Explanation — Group company

Includes relationships such as:

(i) subsidiary–parent;

(ii) joint venture;

(iii) associate;

(iv) promoter–promotee;

(v) related party;

(vi) common brand name;

(vii) investment of 20% or more in equity shares of the entity.

Explanation (b) — Accounting Standards

Means Accounting Standards notified by Central Government under the Companies Act provisions specified in the section.

🔥 Number

20% equity investment = one specified group-company relationship

45NB. Disclosure of information

45NB(1)

Information relating to an NBFC:

  • contained in statements/returns submitted under Chapter IIIB; or
  • obtained by RBI through audit, inspection or otherwise,

is:

confidential

and cannot be disclosed except as permitted by Section 45NB.

45NB(2) — Exceptions

(a)

NBFC may disclose information submitted to RBI with:

prior RBI permission.

(b)

RBI may publish information in the:

public interest

in consolidated form, but without disclosing:

  • NBFC’s name;
  • borrowers’ names.

(c)

NBFC or RBI may disclose/publish information to another NBFC:

  • according to customary practice/usage; or
  • as permitted/required by another law.

Proviso

Information received by an NBFC under this clause cannot be published except according to:

  • customary practice/usage; or
  • another law permitting/requiring it.

45NB(3)

RBI may, if satisfied it is necessary for:

  • public interest;
  • depositors’ interest;
  • NBFC’s interest; or
  • preventing detrimental conduct,

furnish/communicate information about an NBFC’s conduct of business to an authority constituted under law.

This can be done:

  • on RBI’s own motion; or
  • upon request.

45NB(4)

No court, tribunal or other authority can compel RBI to produce or permit inspection of statements/material obtained under Chapter IIIB.

45NC. Power of Bank to exempt

RBI may, through notification in the Official Gazette, exempt:

  • a non-banking institution;
  • class of non-banking institutions;
  • an NBFC;
  • class of NBFCs;

from:

  • all or some provisions of Chapter IIIB;

either:

  • generally; or
  • for a specified period.

RBI may impose:

  • conditions;
  • limitations;
  • restrictions.

🔥 Key point

45NC = RBI’s exemption power under Chapter IIIB.

45O. Penalties

45O — REPEALED

Repealed by the Reserve Bank of India (Amendment) Act, 1974.

45P. Cognizance of offence

The heading is present in the Act, but the operative provision is shown as repealed/omitted in the subsequent text of the uploaded Act. Treat it as non-operative for the current text rather than inventing an offence mechanism.

🔥 SECTION 45 SERIES — EXAM MEMORY MAP

Registration & financial discipline

45-IA → CoR + NOF
45-IB → approved securities/assets
45-IC → reserve fund
45-ID → remove director
45-IE → supersede Board

Regulation

45-J → advertisements/prospectus
45-JA → policy + directions
45-K → deposit information/directions
45-L → financial institution information/directions
45-M → duty to furnish information
45-MA → auditors
45-MAA → action against auditors

Trouble-resolution/enforcement

45-MB → prohibit deposits + restrict asset dealings
45-MBA → resolution
45-MC → winding-up petition
45-N → inspection
45-NA → unauthorised deposit solicitation
45-NAA → group companies
45-NB → confidentiality
45-NC → exemption

Numbers to burn into memory

45-IA → ₹25 lakh / up to ₹100 crore in uploaded 2022 text
45-IA(2) → 6 months
45-IA(3) → 3 years; maximum 6 years
45-IA(6)(v) → 3 months deposit prohibition
45-IA(7) → 30-day appeal
45-IA NOF calculation → 10% threshold
45-IB → 5% to maximum 25%
45-IB → 3% above Bank Rate → 5% above Bank Rate
45-IB → 14 days
45-IC → 20% of net profit
45-IC → report withdrawal within 21 days
45-ID → director removal up to 5 years at a time
45-ID → replacement director 3 years at a time
45-IE → Board supersession maximum 5 years
45-IE committee → 3 or more members
45-MAA → auditor debarment 3 years at a time
45-MB → asset restriction maximum 6 months
45-MC → 5 working days = deemed inability to pay
45-NAA → 20% equity relationship

Next: Sections 45P onward — remaining Chapter IIIB provisions, Chapter IIIC, monetary policy-related provisions, and then the later enforcement/penalty machinery.

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