RBI cancels Certificate of Registration of two NBFC

Case Brief

The Reserve Bank of India cancelled the Certificates of Registration of two NBFCs: BRD Securities Ltd and Lakshmi Finance Private Limited. The action was taken under Section 45-IA(6) of the RBI Act, 1934. Following the cancellation, the companies are prohibited from transacting the business of a Non-Banking Financial Institution as defined in the Act.

Action Snapshot

Primary Impact: License cancellation
Entity Type: NBFC
Location: Thrissur, Kerala
Order Date

13 Mar 2023

Effective From

13 Mar 2023

Entities Affected

2

Why RBI Acted

Licensing breach

The Reserve Bank of India cancelled the Certificate of Registration of BRD Securities Ltd and Lakshmi Finance Private Limited under Section 45-IA(6) of the RBI Act, 1934. The release states that, as a result, the companies shall not transact the business of a Non-Banking Financial Institution as defined in the Act.

Severity Assessment

Cancellation of a Certificate of Registration is a license-cancellation action and is severity 5 by the rubric.

Impact

Both entities must stop NBFC operations and cannot legally undertake non-banking financial institution business. Customers and counterparties dealing with these firms are affected by the cessation of regulated NBFC activity.

Regulatory Basis

Section 45-IA (6) of the Reserve Bank of India Act, 1934
clause (a) of Section 45-I of the RBI Act, 1934

Restrictions & Effective Timeline

Effective From: 13 Mar 2023

Affected Entities

BRD Securities Ltd
Published as BRD Securities Ltd
NBFC · Primary
Lakshmi Finance Private Limited
Published as Lakshmi Finance Private Limited
NBFC · Bulk Member