RBI modifies guidelines for core investment companies

The Reserve Bank of India (RBI) has modified the definitions in the guidelines to core investment companies that it considers as systemically important.

In its directive issued in August 2010, RBI had advised all systemically important CICs to get a certificate of registration within a period of six months from the date of the notification.

It has now further advised such CICs that the term "adjusted net worth" in the guidelines meant the aggregate, as appearing in the last audited balance sheet as at the end of the financial year, of owned funds as defined in non-banking financial (non-deposit accepting or holding) companies prudential norms issued in 2007.

These should include 50 per cent of the unrealised appreciation in the book value of quoted investments as at the date of the last audited balance sheet as also at the end of the financial year, which are in excess of the aggregate market value of such investments over the book value of such investments and the increase, if any, in the equity share capital since the date of the last audited balance sheet.

It may also include any decline or diminution in the aggregate book value of quoted investments (such diminution being calculated as the excess of the book value of such investments over the aggregate market value of such investments) and the reduction, if any, in the equity share capital since the date of the last audited balance sheet.

Investments should include investment in shares, stocks, bonds, debentures or securities issued by the government or local authority or other marketable securities of a like nature.