What changed
Previously, CICs meeting criteria like 90% assets in shares for holding stake were exempt from RBI registration. Now, all CICs investing in shares for holding stake are considered NBFCs, and those with asset size ₹100 crore and above must register as systemically important CICs. Smaller CICs (asset size < ₹100 crore) are exempt from registration, with aggregation of all CICs in a group.
What it means for you
Banks and lenders dealing with CICs must now verify their registration status, especially for those with assets ≥ ₹100 crore. This brings regulatory clarity and systemic oversight, reducing ambiguity around CIC classification. Lenders should update their due diligence processes to ensure compliance with the new framework.
What you must do
- Review your exposure to CICs and classify them based on asset size (≥ ₹100 crore vs. < ₹100 crore), aggregating all CICs in a group.
- Ensure CICs with assets ≥ ₹100 crore have obtained Certificate of Registration from RBI under Section 45-IA.
- Update internal policies to treat all CICs as NBFCs for regulatory reporting and risk assessment.
- Monitor CIC compliance with conditions for exemption: maintain a minimum capital ratio of 30% (Adjusted Net Worth to risk-weighted assets) and leverage ratio (outside liabilities not exceeding 2.5 times Adjusted Net Worth).
Who it affects
Core Investment Companies (CICs) with asset size of ₹100 crore and above, Banks and financial institutions lending to CICs, NBFC regulators and compliance teams
What is the asset threshold for a CIC to be considered systemically important?
CICs with an asset size of ₹100 crore and above as per the last audited balance sheet are treated as systemically important and must register with RBI. All CICs belonging to a group are aggregated for this threshold.
Are all CICs now required to register with RBI?
No. CICs with asset size less than ₹100 crore are exempt from registration under Section 45-IA of the RBI Act. Only those with assets of ₹100 crore or more must register.
What exemptions do registered CICs get under the new framework?
Registered CICs that adhere to capital ratio (Adjusted Net Worth ≥ 30% of risk-weighted assets) and leverage ratio (outside liabilities ≤ 2.5 times Adjusted Net Worth) are exempt from maintenance of statutory minimum Net Owned Fund and from the prudential norms directions (including capital adequacy and exposure norms).