>>CEILING ON INTEREST RATES
To All Non-Banking Financial Companies
including Chit Fund and Nidhi Companies
Dear Sirs,
It has been decided that, keeping in view the prevailing interest rates
in the entire financial system, the interest rates on deposits of NBFCs should
be reduced by two percentage points, from the present level of 16 percent per
annum to 14 per cent per annum, with immediate effect. The new rates of
interest are applicable to fresh public deposits and renewals of matured public
deposits on and from April 1, 2001. The ceiling rate of interest of 14 per cent
has also been extended to miscellaneous non-banking companies and nidhi
companies.
2. You are requested to ensure meticulous compliance with the new ceiling
on rate of interest. Other conditions relating to the rests at which interest
can be compounded, rate of brokerage, etc., remain unchanged. It is also
reiterated that the NBFCs are strictly prohibited from payment of any
incentive, gifts, etc., to the depositors.
3. A copy each of the amending Notifications No. 146 and 147 is enclosed.
Yours faithfully,
Sd/-
(R. Sadanandam)
Chief General Manager-in-Charge
Encls: 2 sheets
The Reserve Bank of India, having considered it necessary in the public
interest and being satisfied that for the purpose of enabling the Bank to
regulate the credit system to the advantage of the country, it is necessary to
amend the Non-Banking Financial Companies Acceptance of Public Deposits
(Reserve Bank) Directions, 1998, in exercise of the powers conferred by
Sections 45J, 45K, 45L and 45MA of the Reserve Bank of India Act, 1934 (2 of
1934) and of all the powers enabling it in this behalf, hereby directs that the
said directions contained in Notification No. DFC. 118 / DG (SPT)/98 dated
January 31, 1998 stand amended, with immediate effect, as follows, namely –
In Paragraph 4, sub-paragraph (7) shall be substituted by the following ,
namely
"(7) On and from April 1, 2001 no non-banking financial company
shall invite or accept or renew public deposit at a rate of interest exceeding
fourteen per cent per annum. Interest may be paid or compounded at rests which
shall not be shorter than monthly rests."
Sd/-
( R. Sadanandam )
Chief General Manager-in-Charge
The Reserve Bank of India, having considered it necessary in the public
interest and being satisfied that for the purpose of enabling the Bank to
regulate the credit system to the advantage of the country, it is necessary to
amend the Miscellaneous Non-Banking Companies (Reserve Bank) Directions, 1977,
in exercise of the powers conferred by Sections 45J, 45K and 45L of the Reserve
Bank of India Act, 1934 (2 of 1934) and of all the powers enabling it in this
behalf, hereby directs that the said directions contained in Notification No.
DFC. 39 / DG (H)-77 dated June 30, 1977 shall stand amended with immediate
effect, as follows, namely -
In paragraph 9A, in sub-paragraph (a), on and from April 1, 2001, the
words "fifteen per cent " shall be substituted by the words
"fourteen per cent".
Sd/-
( R. Sadanandam )
Chief General Manager-in-Charge