Vide its circular no. RBI/2012-2013/21 DNBS (PD) CC.No.30/SCRC/26.03.001/2012-2013 dated July 2, 2012, RBI has issued a master circular on directions/ instructions issued to the Secularization Companies/ Reconstruction Companies. RBI has directed the Secularization Company or Reconstruction Company to submit the application for a Certificate of Registration to commence/ carry on the business in the prescribed format.
It further instructs the Secularization Company or Reconstruction Company to maintain a minimum owned fund of an amount not less than 15% of the total financial assets acquired or to be acquired by the Secularization Company or Reconstruction Company on an aggregate basis or Rs.100 crore whichever is lower.
The Secularization Company or Reconstruction Company should commence business within six months from the date of grant of Certificate of Registration. Quarterly Statement in the formats viz. SCRC1 & SCRC2 on assets acquired secularized and reconstructed are to be submitted by Secularization Companies/ Reconstruction Companies registered with the RBI within 15 days of close of the quarter to which it pertains. All the SCs/RCs registered with the Bank are advised to furnish the position of Owned Fund in Quarterly Statement. The Secularization Company or Reconstruction Company shall invest in the Security Receipts issued by the trust set up for the purpose of secularization, an amount not less than 5% under each scheme with immediate effect.
The Secularization Companies/ Reconstruction Companies registered with the Bank under the SARFESAI Act have to declare Net Asset Value of the Security Receipts issued by them at periodical intervals. A Secularization Company/ Reconstruction Company is neither a ‘bank’ in terms of provisions of Section 2(1)(c) of the SARFAESI Act, 2002 nor a ‘financial institution’ in terms of provisions of Section 2(1)(m) of the said Act. Therefore, acquisition of financial assets by one SC/ RC from another SC/ RC will not be in conformity with the provisions of the SARFAESI Act, 2002.
The Reserve Bank of India had issued for the first time circular/ guidelines on the captioned subject enabling the SCs/RCs registered with the Bank to take recourse to measure outlined in Section 9(a) of the SARFAESI Act, 2002 dealing with the issue. It is made mandatory that the Secularization Company or Reconstruction Company shall continue to hold a minimum of 5% of the Security Receipts of each class issued by the SC/RC under each scheme on an ongoing basis till the redemption of all the Security Receipts issued under such scheme. Secularization companies/reconstruction companies (SCs/RCs) are covered under the definition of “credit institution”, thus, all SC/RCs being 'credit institutions' are required to become a member of at least one credit information company as per the statute.
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