Bhaskar is presently running a business of finance. He has planned to promote an Infrastructure Finance Company along with his friends. He seeks your advice to know whether it is a Non-Banking Finance Company requiring R

Infrastructure Finance Company Yes, the proposed Infrastructure Finance Company is a non-banking finance company that (a) deploys at least 75 percent of its total assets in infrastructure loans (b) has a minimum net owned funds of ₹ 300 crore (c) maintains a minimum credit rating of 'A' or equivalent (d) and has a capital to risk assets ratio (CRAR) of 15% It requires registration with the Reserve Bank of India. Net Owned Fund Formula The net owned fund would be calculated based on the last audited balance sheet of the company. Net owned fund will consist of paid-up equity capital, free reserves, balance in share premium account and capital reserve representing surplus arising out of sale proceeds of assets but not reserve created by revaluation of assets. From the aggregate of items it will be deducted, accumulated loss balance and book value of intangible assets, if any, to arrive at owned funds. Further, investment in shares of other NBFCs and in shares, debentures of subsidiaries and group companies in excess of 10% of the owned funds mentioned above will be deducted to arrive at the Net Owned Fund. In terms of section 45-IA of the Reserve Bank of India Act, 1934, a non-banking financial company can commence or carry on business of a non-banking financial institution only after obtaining a certificate of registration from the Reserve Bank of India.