Shriram City Union Finance Limited - Karvy

such withdrawal.Maintenance of liquid assetsThe RBI through notification dated January 31, 1998, as amended has prescribed that every NBFC shallinvest and continue to invest in unencumbered approved securities valued at a price not exceeding thecurrent market price of such securities an amount which shall, at the close of business on any day be notless than 10% in approved securities and the remaining in unencumbered term deposits in any scheduledcommercial bank; the aggregate of which shall not be less than 15% of the public deposit outstanding atthe last working day of the second preceding quarter.5. Obligations of NBFC-D under the Public Deposit DirectionsThe RBI’s Public Deposit Directions governs the manner in which NBFCs may accept and/or hold publicdeposits. The Public Deposit Directions places the following restrictions on NBFCs in connection withaccepting public deposits:1. Prohibition from accepting any demand deposits: NBFCs are prohibited from accepting any public depositwhich is repayable on demand.2. Ceiling on quantum of deposits: A NBFC which is classified as an asset finance company, (a) having netowned funds of ` 25,00,000/- (Rupees twenty five lakh only) or more, and, (b) having complied with allprudential norms relating to the capital adequacy ratio of not less than fifteen percent as per last auditedbalance-sheet, may, accept or renew public deposits not exceeding one and one-half times of its net ownedfunds or public deposit up to ` 10,00,00,000/- (Rupees ten crore), whichever is less. Further, an assetfinance company, (a) having net owned funds ` 25,00,000/- (Rupees twenty five lakh only) or more, (b)having complied with all the prudential norms, and (c) having obtained minimum investment grade creditrating from a notified credit rating agency, may, accept or renew public deposits not exceeding four timesof its net owned funds.3. Downgrading of credit-rating: In the event that the credit rating issued by a credit rating agency recognisedby RBI, for an asset finance company is downgraded below the minimum specified investment grade, withrespect to the relevant credit rating agency, the NBFC must (a) forthwith stop accepting public deposit, (b)report the position of the credit rating within fifteen working days to the RBI, and, (c) reduce, within threeyears from the date of such downgrading of credit rating, the amount of excess public deposit to nil or theappropriate extent as permitted under the Public Deposit Directions, by repayment as and when suchdeposit falls due or otherwise.4. Ceiling on rate of interest: An NBFC cannot invite or accept or renew public deposit at a rate of interestexceeding twelve and half per cent per annum. Such interest may be paid or compounded at rests whichshall not be shorter than monthly rests.5. Minimum lock-in period: An NBFC is prohibited from granting any loan against a public deposit or makepremature repayment of a public deposit within a period of three months from the date of acceptance ofsuch public deposit.6. Obligations of NBFC-D under the Prudential NormsNBFC-Ds are required to comply with prescribed capital adequacy ratios, single and group exposurenorms, and other specified prudential requirements prescribed under the Prudential Norms. Some of theimportant obligations are as follows:i) Income Recognition: NBFC-Ds are required to follow recognised accounting principles inconnection with recognition of income. Income including interest/discount or any other charges onNPA is recognised only when it is actually realised. Any such income recognised before the assetbecame non-performing and remaining unrealised must be reversed. With respect to hire purchaseassets, where instalments are overdue for more than 12 months, income shall be recognised only177