RBI announces tightened norms for core investment companies
The central bank has tightened the norms for CICs for better risk managements and simplifying their structures
Based on the feedback from all the stakeholders and a working group, the Reserve Bank of India (RBI) has tightened the norms for core investment companies (CICs), said a report by The Economic Times.
While computing Adjusted Net Worth (ANW), the amount representing any direct or indirect capital contribution made by one CIC in another CIC, to the extent such amount exceeds 10 percent of owned funds of the investing CIC, will be deducted, RBI statement was quoted sahying in the report.
To simplify the group structures and existence of multiple CICs within a group, the central bank has restricted the number of layers of CICs to two within a group, said the report stating the revised guidelines.
The norms further stated that the parent CIC in the group of the CIC with the largest asset size will constitute a Group Risk Management Committee (GRMC). This has been done to analyze the material risks to which the group, its businesses, and subsidiaries are exposed, The Economic Times reported.
RBI further said that the corporate governance requirements for CICs should be as per the Companies Act 2013. CICs should also prepare CFS as per the act to provide a clear view of the financials of the group as a whole, it said as per the report.