It
has been decided to substitute, with immediate effect, the
existing Rule-10 (ii) of the NBFIs Rules of Business by the
following:
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No
NBFI shall:
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Provide
unsecured facilities to finance subscription towards
floatation of share capital of public limited companies.
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Allow
financing facilities, whether fund based or non-fund
based, against the shares of companies not listed on
the Stock Exchange.
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Provide
loans and advances to any public limited company against
the security of its own shares or shares of its associated
companies. The existing lending against such shares
shall be regularized within 180 days of the date of
issue of this Circular.
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Provide
financing against sponsor directors shares
(issued in their own name or in the name of their family
members) of Banks/NBFIs.
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Provide
financing to any one person (whether singly or together
with other family members or companies owned and controlled
by him or his family members) against shares (other
than the sponsor shares) of any NBFI in excess of 5%
of paid up capital of that NBFI.
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Allow
financing facilities, whether fund based or non-fund
based, against the shares of companies which are not
in the Central depository System.
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Hold
shares in any company whether as pledgee, mortagagee,
or absolute owner, of an amount exceeding thirty percent
of the paid-up share capital of that company or thirty
per cent its own paid-up share capital and reserves,
whichever is less.
2.
Facilities against the shares of listed companies shall be
subject to minimum margin of 30% of its average market value
of the preceding 12 months. The NBFIs are however, free to
set higher margin requirements keeping in view other factors.
3.
NBFIs shall obtain prior clearance from the State Bank for
the purchase of shares of private banks/other NBFIs includingg
Modaraba and Leasing Companies.
4.
Each NBFI shall furnish a statement on half yearly basis showing
finances provided by them against pledge of shares latest
by 20th January and 20th July for each
preceding half-year (as per enclosed format)
5.
Please acknowledge receipt.
Encl:
As above,
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