RBI tightens norms for NBFCs raising money via private placement

MUMBAI: Tightening norms, the RBI on Thursday said Non-Banking Finance Companies ( NBFCs) raising money through private placement of debt should not have more than 49 investors and minimum subscription from single investor should be Rs 25 lakh.

"The minimum subscription amount for a single investor shall be Rs 25 lakh and in multiples of Rs 10 lakh thereafter... Private placement by all NBFCs shall be restricted to not more than 49 investors," it said in a notification.

There should be a minimum time-gap of at least six months between two private placements and the NBFCs should not extend loans against the security of its own debentures, it said.

The guidelines were issued as it was observed that NBFCs were raising resources from the retail public on a large scale through private placement especially by issue of debentures, RBI said.

NBFCs are allowed to raise money by issuing capital/debt securities including debentures by way of public issue or private placement. For public issue of such securities, institutions and retail investors are allowed to participate.