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Thursday, April 25, 2024

Experts think that six NBFCs need to list in the next year

<p>Although the spotlight of the last week has been on Tata Sons’ initial public offering (IPO), five other businesses also need to make their offerings in a little over a year. These include businesses like Aditya Birla Finance, Piramal Capital and Housing Finance, Tata Capital Financial Services, HDB Financial Services, and Bajaj Housing Finance, which are among the five shadow banks that have to list annually due to their inclusion on the Reserve Bank of India’s list of “upper-layer” non-banking financial companies.</p>
<p><img decoding=”async” class=”alignnone wp-image-497861″ src=”https://www.theindiaprint.com/wp-content/uploads/2024/03/theindiaprint.com-experts-think-that-six-nbfcs-need-to-list-in-the-next-year-nbfc-a14ba6-11zon-750×422.jpg” alt=”theindiaprint.com experts think that six nbfcs need to list in the next year nbfc a14ba6 11zon” width=”992″ height=”559″ title=”Experts think that six NBFCs need to list in the next year 12″ srcset=”https://www.theindiaprint.com/wp-content/uploads/2024/03/theindiaprint.com-experts-think-that-six-nbfcs-need-to-list-in-the-next-year-nbfc-a14ba6-11zon-750×422.jpg 750w, https://www.theindiaprint.com/wp-content/uploads/2024/03/theindiaprint.com-experts-think-that-six-nbfcs-need-to-list-in-the-next-year-nbfc-a14ba6-11zon-768×432.jpg 768w, https://www.theindiaprint.com/wp-content/uploads/2024/03/theindiaprint.com-experts-think-that-six-nbfcs-need-to-list-in-the-next-year-nbfc-a14ba6-11zon-390×220.jpg 390w, https://www.theindiaprint.com/wp-content/uploads/2024/03/theindiaprint.com-experts-think-that-six-nbfcs-need-to-list-in-the-next-year-nbfc-a14ba6-11zon.jpg 1024w” sizes=”(max-width: 992px) 100vw, 992px” /></p>
<p>“Because of their size and activities, Upper Layer NBFCs (NBFC-UL) are subject to tougher restrictions. According to Rohan Rai, associate lawyer at RR Legal Partners, “listing on a stock exchange within three years of being classified as such is one of the key requirements for NBFC-UL.”</p>
<p>The RBI published scale-based rules in October 2021 that categorized NBFCs according to their size, activity, and perceived vulnerability. These standards divide NBFCs into four categories: base layer, middle layer, upper layer, and top layer.</p>
<p>The NBFCs that the central bank has officially designated as needing more stringent regulations make up the top tier.</p>
<p>According to Vipul Jai, Partner at PSL Advocates & Solicitors, “these NBFCs designated as upper layer NBFCs are subject to a rigorous, bank-like regulatory framework including mandatory listing within three years from the date of such designation.”</p>
<p>The RBI released its list of the 16 upper-layer NBFCs in September 2022. In 2023, this list was revised, and Shanghvi Finance was left off of it.</p>
<p>“These NBFCs must take action to be listed within 3 (three) years of being identified as NBFC UL if they are not listed at the time of categorization as NBFC UL,” said Amit Kumar Nag, Partner at AQUILAW. This implies that by September 2025, these six NBFCs need to launch on the market.</p>
<p>The news that the conglomerate is preparing to introduce Tata Sons, its holding company, for an initial public offering has caused shares of Tata Group firms to jump in the previous few days. Yet, the company has not yet provided an official statement to support this.</p>
<p>Vatsal Gaur, Partner, King Stubb & Kasiva, states that “disclosure requirements shall be put in place on the same lines as applicable to a listed company even before the actual listing, as per Board approved policy of the NBFC.”</p>
<p>According to Gaur, unlisted upper-layer NBFCs need to create a board-approved plan of action to ensure that they comply with listed businesses’ disclosure obligations.</p>
<p>However, some analysts believe that NBFCs opposed to being required to list would try to rearrange their present business and move up into a new tier under the scale-based rules. However, the RBI will have the last say in this situation.</p>
<p>Unfortunately, for NBFC-UL businesses, listing is the only option available at this time. According to Rai, the laws expressly need listing in order to guarantee these bigger NBFCs more openness and public responsibility.</p>

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