RBI Nod Mandatory To Takeover, Acquire Control Of NBFCs

To ensure 'fit and proper' character of the management of NBFCs, the Reserve Bank of India said any takeover or acquisition control of such an entity (NBFC) would now require its prior approval in writing.

"The prior written permission of the Reserve Bank of India shall be required for any takeover or acquisition of control of an NBFC, whether by acquisition of shares or otherwise," the central bank said in a notification dated 27th May, 2014.

Permission will also be required for any merger or amalgamation of an NBFC with another entity or any merger or amalgamation of an entity with an NBFC that would give the acquirer/another entity control of the NBFC in addition to those resulting in acquisition/ transfer of shareholding in excess of 10 per cent of the paid up capital of the NBFC.