applicability of Section 186 to NBFC

[Prakshi Agrawal]

Dear Members,

Following are the exemptions provided from the applicability of Section 186:

) to a loan made, guarantee given or security provided by a banking company or an insurance company or a housing finance company in the ordinary course of its business or a company engaged in the business of financing of companies or of providing infrastructural facilities;
(b) to any acquisition—
(i) made by a non-banking financial company registered under Chapter IIIB of the Reserve Bank of India Act, 1934 and whose principal business is acquisition of securities:
Provided that exemption to non-banking financial company shall be in respect of its investment and lending activities;
(ii) made by a company whose principal business is the acquisition of securities;
(iii) of shares allotted in pursuance of clause (a) of sub-section (1) of section 62.
1["(iv) made by a banking company or an insurance company or a housing finance company, making acquisition of securities in the ordinary course of its business."]

Now my question is this, as per the above provisions the exemption to a NBFC is applicable only in case of acquisition and whose principal business is acquisition of securities. So, if any NBFC engaged in ordinary lending activities between inter-corporate, do they need to comply the provisions of Section 186. Or, is there any clarification or circular issued by MCA regarding this,.....pls advise

[Umesh Vyas]

Prakshiji,

According to my personal views, exemption to NBFCs are specifiec and for transactions specifically prescribed for exemptions, NBFCs have to comply with provisions of section 186 need to complied.

Views are personal. other views are solicited.

With Regards,

Umesh Vyas

 

CS Umesh Vyas.

B.Com., LL.B., ACS

Practising Company Secretary.

Mob.:09427630539

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[Prakshi Agrawal]

Hi,

thanks a lot for your reply,

my view is also same....as exemption to NBFC are only in case of acquisition of securities as per sub-section 11(b) and moreover if they specifically want to exclude the NBFC in entirety then the law makers would have inserted the NBFC in sub-section 11(a) itself.

But still, I want more opinions on the same....and thats why posted this query.

Requesting to other members as well that please solicit your views on this.

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