recommendations-of-a-working-group-for-core-investment-companies

Why is it in the news ?                          

  • A working group under Tapan Ray  set up by the Reserve Bank of India (RBI) has proposed stringent corporate governance guidelines for core investment companies (CICs) and restricting the number of CICs in a group to two.

What are the recommendations ?

  • The group has recommended the constitution of the board-level committee in order to strengthen governance practices,  such as –
    • Audit Committee
    • Nomination and Remuneration Committee
    • Group Risk Management Committee

 

Core Investment Company

These are specialized Non-Banking Financial Companies (NBFCs).

  • They have an asset size of Rs 100 crore and above.
  • Their main business is the acquisition of shares and securities with certain conditions.
  • It does not trade in its investments in shares, bonds, debentures, debt or loans in group companies except through block sale for the purpose of dilution or disinvestment.
  • It accepts public funds.
  • It holds no less than 90 per cent of its net assets in the form of investment in equity shares, preference shares, bonds, debentures, debt or loans in group companies.
  • Further, investments in equity shares in group companies constitute not below 60 per cent of its net assets.