Several Credits Finance Company Ltd., a Non-Banking Finance Company (NBFC) is in the process of merging with Hatke Bank Ltd, a Scheduled Bank. Recommend the steps/actions to be undertaken by Hatke Bank Ltd with respect t
CS Professional · Corporate Restructuring, Valuation and Insolvency · PYQS · June 2018
Several Credits Finance Company Ltd., a Non-Banking Finance Company (NBFC) is in the process of merging with Hatke Bank Ltd, a Scheduled Bank. Recommend the steps/actions to be undertaken by Hatke Bank Ltd with respect to the relevant statutory provisions as may be applicable in this case.
Answer & Explanation:
In case of scheme of merger by the Non-Banking Financial Company (NBFC), approval needs to be obtained from National Company Law Tribunal, whereas the scheme by Banks needs approval from Reserve Bank of India. As per paragraphs 15 and 16 of the Master Direction issued by RBI, the Banking Company needs to ensure: The NBFC has not violated any RBI/SEBI norms; The NBFC complied with KYC norms of all its accounts which will become accounts of banking company after amalgamation; If it is found that the NBFC has any credit facilities from Banks or Financial Institutions, whether the loan agreements mandate the NBFC to seek consent of the Lending Bank/FI for merger/amalgamation.
Topics: Corporate Restructuring
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