The RBI has decided to merge the three categories of NBFCs namely. Asset Finance Companies (AFC), Loan Companies (LCs) and Investment Companies (ICs) into a new category called NBFC - Investment and Credit Company (NBFC-ICC).
In a RBI notification released on Friday, the central bank will merge the 3 sub-categories of NBFCs to form a new category. "On a review, it has been decided that in order to provide NBFCs with greater operational flexibility, harmonisation of different categories of NBFCs into fewer ones shall be carried out based on the principle of regulation by activity rather than regulation by an entity," the RBI added.
Further, a deposit-taking NBFC-ICC shall invest in unquoted shares of another company which is not a subsidiary company or a company in the same group of the NBFC, an amount not exceeding 20% of its owned fund, the central bank said.