Reserve Bank of India has set up a six-member working group to review the regulatory and supervisory framework for Core Investment Companies (CICs). The panel will be headed by Tapan Ray, Non-Executive Chairman, CBI. The move comes as the corporate group structures becomes more complex and layered. The working group has been asked to submit its report by October 31, 2019.
Lately, the corporate group structures have become more complex involving multiple layering and leveraging, which has led to greater inter-connectedness with the financial system through their access to public funds. The governance framework of CICs need to be strengthened due to elevated recent developments.
Function of the panel:
The current regulatory regime for CICs will be reviewed by the panel. It will suggest changes to the current approach for their registration, including the practice of multiple CICs being allowed within a group.
It will also suggest measures to strengthen corporate governance and disclosure requirements for CICs.
It will assess the adequacy of supervisory returns submitted by these entities.
The committee will recommend appropriate measures to enhance RBI’s off-sight surveillance and on-site supervision over CICs.
Member of the commitee:
Head: Tapan Ray, Non-Executive Chairman, Central Bank of India, and former Secretary, Ministry of Corporate Affairs
Other members of the working group:
Lily Vadera, Executive Director, RBI
Amarjeet Singh, Executive Director, SEBI
T Rabishankar, Chief General Manager, Financial Markets Regulation Department, RBI
HK Jena, Deputy Managing Director, SBI
NS Venkatesh, Chief Executive, Association of Mutual Funds in India.
In August 2010, RBI introduced a separate framework for the regulation of systemically important CICs after recognising the difference in the business model of a holding company compared to other non-banking financial companies (NBFCs).