CHAPTER II

REGULATION OF SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS OF BANKS AND FINANCIAL INSTITUTIONS

3. Registration of securitisation companies or reconstruction companies

(1) No securitisation company or reconstruction company shall commence or carry on the business of securitisation or asset reconstruction without--

(a)        obtaining a certificate of registration granted under this section; and

(b)        having the owned fund of not less than two crore rupees or such other amount not exceeding fifteen per cent of total financial assets acquired or to be acquired by the securitisation company or reconstruction company, as the Reserve Bank may, by notification, specify:

PROVIDED that the Reserve Bank may, by notification, specify different amounts of owned fund for different class or classes of securitisation companies or reconstruction companies:

PROVIDED FURTHER that a securitisation company or reconstruction company, existing on the commencement of this Act, shall make an application for registration to the Reserve Bank before the expiry of six months from such commencement and notwithstanding anything contained in this sub-section may continue to carry on the business of securitisation or asset reconstruction until a certificate of registration is granted to it or, as the case may be, rejection of application for registration is communicated to it.

(2) Every securitisation company or reconstruction company shall make an application for registration to the Reserve Bank in such form and manner as it may specify.

(3) The Reserve Bank may, for the purpose of considering the application for registration of a securitisation company or reconstruction company to commence or carry on the business of securitisation  or asset reconstruction, as the case may be, require to be satisfied, by an inspection of records or books of such securitisation company or reconstruction company, or otherwise, that the following conditions are fulfilled, namely:--

(a)        that the securitisation company or reconstruction company has not incurred losses in any of the three preceding financial years;

(b)        that such securitisation company or reconstruction company has made adequate arrangements for realisation of the financial assets acquired for the purpose of securitisation or asset reconstruction and shall be able to pay periodical returns and redeem on respective due dates on the investments made in the company by the qualified institutional buyers or other persons;

(c)        that the directors of securitisation company or reconstruction company have adequate professional experience in matters related to finance, securitisation and reconstruction;

(d)        that the board of directors of such securitisation company or reconstruction company does not consist of more than half of its total number of directors who are either nominees of any sponsor or associated in any manner with the sponsor or any of its subsidiaries;

(e)        that any of its directors has not been convicted of any offence involving moral turpitude;

(f)         that a sponsor, is not a holding company of the securitisation company or reconstruction company, as the case may be, or, does not otherwise hold any controlling interest in such securitisation company or reconstruction company;

(g)        that securitisation company or reconstruction company has complied with or is in a position to comply with prudential norms specified by the Reserve Bank.

(h)        that securitisation company or reconstruction company has complied with one or more conditions specified in the guidelines issued by the Reserve Bank for the said purpose.

(4) The Reserve Bank may, after being satisfied that the conditions specified in sub-section (3) are fulfilled, grant a certificate of registration to the securitisation company or the reconstruction company to commence or carry on business of securitisation or asset reconstruction, subject to such conditions which it may consider, fit to impose.

(5) The Reserve Bank may reject the application made under sub-section (2) if it is satisfied that the conditions specified in sub-section (3) are not fulfilled:

PROVIDED that before rejecting the application, the applicant shall be given a reasonable opportunity of being heard.

(6) Every securitisation company or reconstruction company, shall obtain prior approval of the Reserve Bank for any substantial change in its management or change of location of its registered office or change in its name:

PROVIDED that the decision of the Reserve Bank, whether the change in management of a securitisation company or a reconstruction company is a substantial change in its management or not, shall be final.

Explanation : For the purposes of this section, the expression "substantial change in management" means the change in the management by way of transfer of shares or amalgamation or transfer of the business of the company.

COMMENTS

Business of securitisation or asset reconstruction cannot be commenced or carried on by a company unless it gets registered under the Act on an application filed to the RBI for that purpose in the prescribed form.  If the applicant-company does not satisfy the conditions specified under s. 3(3), the RBI is empowered to reject the application.  Under s. 3, the RBI is also entitled to cancel a registration, if there is a "substantial change in management", meaning thereby the change in the management of the company by way of transfer of shares or amalgamation or transfer of the business of the company, and the decision in respect thereof taken by the RBI is final as stated in the proviso to sub-s. (6) of s. 3.

A securitisation or reconstruction company can not carry on business of securitisation or asset reconstruction without obtaining registration certificate from RBI.  Such company must have minimum owned fund of Rs. two crores or such other amount as may be prescribed by RBI.  The amount so prescribed by RBI should not exceed 15% (percentage) total financial assets acquired by securitisation or reconstruction company.

4. Cancellation of certificate of registration

(1) The Reserve Bank may cancel a certificate of registration granted to a securitisation company or a reconstruction company, if such company--

(a)        ceases to carry on the business of securitisation or asset reconstruction; or

(b)        ceases to receive or hold any investment from a qualified institutional buyer; or

(c)        has failed to comply with any conditions subject to which the certificate of registration has been granted to it; or

(d)        at any time fails to fulfil any of the conditions referred to in clauses (a) to (g) of sub-section (3) of section 3; or

(e)        fails to--

(i)          comply with any direction issued by the Reserve Bank under the provisions of this Act; or

(ii)         maintain accounts in accordance with the requirements of any law or any direction or order issued by the Reserve Bank under the provisions of this Act; or

(iii)        submit or offer for inspection its books of account or other relevant documents when so demanded by the Reserve Bank; or

(iv)        obtain prior approval of the Reserve Bank required under sub-section (6) of section 3:

PROVIDED that before cancelling a certificate of registration on the ground that the securitisation company or reconstruction company has failed to comply with the provisions of clause (c) or has failed to fulfil any of the conditions referred to in clause (d) or sub-clause (iv) of clause (e), the Reserve Bank, unless it is of the opinion that the delay in cancelling the certificate of registration granted under sub-section (4) of section 3 shall be prejudicial to the public interest or the  interests of the investors or the securitisation company or the reconstruction company, shall give an opportunity to such company on such terms as the Reserve Bank may specify for taking necessary steps to comply with such provisions or fulfilment of such conditions.

(2) A securitisation company or reconstruction company aggrieved by the order of cancellation of certificate of registration may prefer an appeal, within a period of thirty days from the date on which such order of cancellation is communicated to it, to the Central Government:

PROVIDED that before rejecting an appeal such company shall be given a reasonable opportunity of being heard.

(3) A securitisation company or reconstruction company, which is holding investments of qualified institutional buyers and whose application for grant of certificate of registration has been rejected or certificate of registration has been cancelled shall, notwithstanding such rejection or cancellation, be deemed to be a securitisation company or reconstruction company until it repays the entire investments held by it (together with interest, if any) within such period as the Reserve Bank may direct.

COMMENTS

The Reserve Bank of India can cancel a certificate of registration granted to a securitisation company or reconstruction company, if said company, (a) ceases to carry on business of securitisation or asset reconstruction, (b) ceases to hold or receive any investment from QIB, (c) fails to comply with conditions stipulated by RBI while granting registration, (d) fails to comply with conditions for registration as stipulated under section 3(3), (e) fails to comply with instructions of RBI or fails to maintain accounts as per requirements or fails to offer them for inspection or makes substantial changes in management without the approval of RBI.  RBI should give an opportunity to the company to take steps for complying with the requirements, unless RBI is of opinion that the delay in cancellation of registration is prejudicial in public interest or the interest of investors of the securitisation or reconstruction company.  In case the registration is cancelled, the appeal can be filed by the concerned securitisation or reconstruction company to the Central Government within 30 days from the date on which such order of rejection or cancellation is communicated to it.

A securitisation or reconstruction company, which is holding investments of Qualified Institutional Buyers and whose application for grant of Certificate of Registration has been rejected or registration has been cancelled shall, notwithstanding such rejection or cancellation of certificate of registration, be deemed to be a securitisation company or reconstruction company until it repays the entire investment held by it.

An order rejecting an application for registration as a securitisation company or as an asset reconstruction company or an order cancelling registration already granted is appealable to the Central Government within a period of thirty days from the date on which the impugned order of rejection or cancellation is communicated to the appellant.

5. Acquisition of rights or interest in financial assets

(1) Notwithstanding anything contained in any agreement or any other law for the time being in force, any securitisation company or reconstruction company may acquire financial assets of any bank or financial institution--

(a)        by issuing a debenture or bond or any other security in the nature of the debenture, for consideration agreed upon between such company and the bank or financial institution, incorporating therein such terms and conditions as may be agreed upon between them; or

(b)        by entering into an agreement with such bank or financial institution for the transfer of such financial assets to such company on such terms and conditions as may be agreed upon between them.

(2) If the bank or financial institution is a lender in relation to any financial assets acquired under sub-section (1) by the securitisation company or the reconstruction company, such securitisation company or reconstruction company shall, on such acquisition, be deemed to be the lender and all the rights of such bank or financial institution shall vest in such company in relation to such financial assets.

(3) Unless otherwise expressly provided by this Act, all contracts, deeds, bonds, agreements, powers-of-attorney, grants of legal representation, permissions, approvals, consents or no-objections under any law or otherwise and other instruments of whatever nature which relate to the said financial asset and which are subsisting or having effect immediately before the acquisition of financial asset under sub-section (1) and to which the concerned bank or financial institution is a party or which are in favour of such bank or financial institution shall, after the acquisition of the financial assets, be of as full force and effect against or in favour of the securitisation company or reconstruction company, as the case may be, and may be enforced or acted upon as fully and effectually as if, in the place of the said bank or financial institution, securitisation company or reconstruction company, as the case may be, had been a party thereto or as if they had been issued in favour of the securitisation company or reconstruction company, as the case may be.

(4) If, on the date of acquisition of financial asset under sub-section (1), any suit, appeal or other proceeding of whatever nature relating to the said financial asset is pending by or against the bank or financial institution, save as provided in the third proviso to sub-section (1) of section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) the same shall not abate, or be discontinued or be, in any way, prejudicially affected by reason of the acquisition of financial asset by the securitisation company or reconstruction company, as the case may be, but the suit, appeal or other proceeding may be continued, prosecuted and enforced by or against the securitisation company or reconstruction company, as the case may be.

COMMENTS

The securitisation or reconstruction company can acquire financial asset by two modes i.e., one is for agreeing for specific consideration, another is without agreeing for specific consideration. Under without specific consideration, it may be contracted that an agreed percentage of amount realised may be paid to Bank/Financial Institutions.

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 has amended s. 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 by adding 2nd and 3rd provisos thereto.  The third proviso which is relevant for the purposes of acquisition of rights or interest in financial assets under s. 5 of the 2002 Act says that on and after the commencement of that Act, where a reference is pending before the Board for Industrial and Financial Reconstruction, such reference shall abate if the secured creditors representing not less than three-fourth in value of the amount outstanding against financial assistance disbursed to the borrower of such secured creditors, have taken any measures to recover their secured debt under s. 13(4) of the 2002 Act.

5A. Transfer of pending applications to any one of Debts Recovery Tribunals in certain cases

(1) If any financial asset, of a borrower acquired by a securitisation company or reconstruction company, comprise of secured debts of more than one bank or financial institution for recovery of which such banks or financial institutions has filed applications before two or more Debts Recovery Tribunals, the securitisation company or reconstruction company may file an application to the Appellate Tribunal having jurisdiction over any of such Tribunals in which such applications are pending for transfer of all pending applications to any one of the Debts Recovery Tribunals as it deems fit.

(2) On receipt of such application for transfer of all pending applications under sub-section (1), the Appellate Tribunal may, after giving the parties to the application an opportunity of being heard, pass an order for transfer of the pending applications to any one of the Debts Recovery Tribunals.

(3) Notwithstanding anything contained in the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, any order passed by the Appellate Tribunal under sub-section (2) shall be binding on all the Debts Recovery Tribunals referred to in sub-section (1) as if such order had been passed by the Appellate Tribunal having jurisdiction on each such Debts Recovery Tribunal.

(4) Any recovery certificate, issued by the Debts Recovery Tribunal to which all the pending applications are transferred under sub-section (2), shall be executed in accordance with the provisions contained in sub-section (23) of section 19 and other provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 shall, accordingly, apply to such execution.

6. Notice to obligor and discharge of obligation of such obligor

(1) The bank or financial institution may, if it considers appropriate, give a notice of acquisition of financial assets by any securitisation company or reconstruction company, to the concerned obligor and any other concerned person and to the concerned registering authority (including Registrar of Companies) in whose jurisdiction the mortgage, charge, hypothecation, assignment or other interest created on the financial assets have been registered.

(2) Where a notice of acquisition of financial asset under sub-section (1) is given by a bank or financial institution, the obligor, on receipt of such notice, shall make payment to the concerned securitisation company or reconstruction company, as the case may be, and payment made to such company in discharge of any of the obligations in relation to the financial asset specified in the notice shall be a full discharge to the obligor making the payment from all liability in respect of such payment.

(3) Where no notice of acquisition of financial asset under sub-section (1) is given by any bank or financial institution, any money or other properties subsequently received by the bank or financial institution, shall constitute monies or properties held in trust for the benefit of and on behalf of the securitisation company or reconstruction company, as the case may be, and such bank or financial institution shall hold such payment or property which shall forthwith be made over or delivered to such securitisation company or reconstruction company, as the case may be, or its agent duly authorised in this behalf.

COMMENTS

Under r. 2(b) of the Security Interest (Enforcement) Rules, 2002, "demand notice" means the notice in writing issued by a secured creditor or authorised officer to any borrower pursuant to sub-s. (2) of s. 13 of the Act.  The said sub-section says that where any borrower, who is under a liability to a secured creditor under a security agreement, makes any default in repayment of secured debt or any instalment thereof, and his account in respect of such debt is classified by the secured creditor as non-performing asset, then, the secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within sixty days from the date of notice failing which the secured creditor shall be entitled to exercise all or any of the rights under sub-section (4).

7. Issue of security by raising of receipts or funds by securitisation company or reconstruction company

(1) Without prejudice to the provisions contained in the Companies Act, 1956 (1 of 1956), Securities Contracts (Regulation) Act, 1956 (42 of 1956), and the Securities and Exchange Board of India Act, 1992 (15 of 1992), any securitisation company or reconstruction company, may, after acquisition of any financial asset under sub-section (1) of section 5, offer security receipts to qualified institutional buyers (other than by offer to public) for subscription in accordance with the provisions of those Acts.

(2) A securitisation company or reconstruction company may raise funds from the qualified institutional buyers by formulating schemes for acquiring financial assets and shall keep and maintain separate and distinct accounts in respect of each such scheme for every financial asset acquired out of investments made by a qualified institutional buyer and ensure that realisations of such financial asset is held and applied towards redemption of investments and payment of returns assured on such investments under the relevant scheme.

(2A)(a)The scheme for the purpose of offering security receipts under sub-section (1) or raising funds under sub-section (2), may be in the nature of a trust to be managed by the securitisation company or reconstruction company, and the securitisation company or reconstruction company shall hold the assets so acquired or the funds so raised for acquiring the assets, in trust for the benefit of the qualified institutional buyers holding the security receipts or from whom the funds are raised.

(b)        The provisions of the Indian Trust Act, 1882 (2 of 1882) shall, except insofar as they are inconsistent with the provisions of this Act, apply with respect to the trust referred to in clause (a) above.

(3) In the event of non-realisation under sub-section (2) of financial assets, the qualified institutional buyers of a securitisation company or reconstruction company, holding security receipts of not less than seventy-five per cent of the total value of the security receipts issued under a scheme by such company, shall be entitled to call a meeting of all the qualified institutional buyers and every resolution passed in such meeting shall be binding on the company.

(4) The qualified institutional buyers shall, at a meeting called under sub-section (3), follow the same procedure, as nearly as possible as is followed at meetings of the board of directors of the securitisation company or reconstruction company, as the case may be.

COMMENTS

Securitisation essentially consists of acquisition of financial assets, mainly debts or receivables, as provided under s. 5 of the Act, and not the assets themselves. A securitisation company or a reconstruction company may acquire the financial assets of any bank or financial institution. After such acquisition, the acquiring company should issue security by raising receipts or funds under s. 7 of the Act.

8. Exemption from registration of security receipt

Notwithstanding anything contained in sub-section (1) of section 17 of the Registration Act, 1908 (16 of 1908),--

(a)        any security receipt issued by the securitisation company or reconstruction company, as the case may be, under sub-section (1) of section 7, and not creating, declaring, assigning, limiting or extinguishing any right, title or interest, to or in immovable property except insofar as it entitles the holder of the security receipt to an undivided interest afforded by a registered instrument; or

(b)        any transfer of security receipts,

shall not require compulsory registration.

COMMENTS

Sec. 17 of the Registration Act, 1908 enumerates documents which are to be compulsorily registered under that Act. A document is compulsorily registrable, if it purports or operates to create, declare, assign, limit or extinguish a right of the value of one hundred rupees and upwards in immoveable property.  So, whether or not a deed is compulsorily registrable must be determined with reference to the consideration or the principal money set forth in the deed, or the least amount payable thereunder irrespective of any interest that might subsequently accrue.--Bikroo v. Anant Bahadhur Singh AIR 1921 Oudh 167, Nabira Rai v. Achampat Rai ILR 3 All 422, Sadogopa v. Darasami ILR 5 Mad 219, Kunbi Amma v. Ahmad Haji ILR 23 Mad 105

The amount of the consideration and not the actual value of the property sold should be taken into account.  Thus, for the purposes of Registration Act, the value of an interest that is conveyed is the consideration mentioned in the sale deed by the parties thereto.  Where the parties to a deed have chosen to specify therein a value for the property dealt with, the court will not go into evidence to question that value. But it would be extending the principle to an unreasonable extent to hold that while no value is stated, the court can ignore an obvious inference of fact that the property dealt with must, in the nature of things, exceed the limit of Rs. 100 in value.--Devidas Jagjivan v. Pirjada Begum ILR 8 Bom 377 Tagappa v. Latchappa ILR 5 Mad 119, Bengal Banking Corpn. v. S.A. Maketich ILR 10 Cal 315

A deed of assignment of a mortgage for over Rs. 100 for consideration less than Rs. 100 for consideration less than Rs. 100 is not compulsorily registrable.  Similarly, a deed of transfer of interest in a hypothecation bond for a consideration less than Rs. 100, though the amount due under the bond is more than Rs. 100, is not compulsorily registrable.  But a deed of transfer of interest in a hypothecation bond for a consideration of more than Rs. 100 though the amount due under the bond is less than Rs. 100 must be registered.--Satra Kumajla v. Visram Hazagada ILR 2 Bom 97, Ramdoolaray Kooer v. Thakoor Roy ILR 4 Cal 61, Ramosami v. Pravadi; 1910 MWN 73

By virtue of s. 8 of the present Act, any security receipt issued under s. 7(1) or any transfer of security receipts shall not be compulsorily registrable.

9. Measures for assets reconstruction

Without prejudice to the provisions contained in any other law for the time being in force, a securitisation company or reconstruction company may, for the purposes of asset reconstruction, having regard to the guidelines framed by the Reserve Bank in this behalf, provide for any one or more of the following measures, namely:--

(a)        the proper management of the business of the borrower, by change in, or take over of, the management of the business of the borrower;

(b)        the sale or lease of a part or whole of the business of the borrower;

(c)        rescheduling of payment of debts payable by the borrower;

(d)        enforcement of security interest in accordance with the provisions of this Act;

(e)        settlement of dues payable by the borrower;

(f)         taking possession of secured assets in accordance with the provisions of this Act.

COMMENTS

"Asset reconstruction" as defined in s. 2(1)(b) of the Act, means acquisition by any securitisation company or reconstruction company of any right or interest of any bank or financial institution in any financial assistance for the purpose of realisation of such financial assistance. An asset reconstruction company or a securitisation company, in accordance with the Reserve Bank Guidelines in this regard can provide for any one or more of the measures as prescribed by cls. (a) to (f) of s. 9.  These powers are almost similar to the powers available to a secured creditor taking over financial asset or management of the asset.

10. Other functions of securitisation company or reconstruction company

(1) Any securitisation company or reconstruction company registered under section 3 may--

(a)        act as an agent for any bank or financial institution for the purpose of recovering their dues from the borrower on payment of such fee or charges as may be mutually agreed upon between the parties;

(b)        act as a manager referred to in clause (c) of sub-section (4) of section 13 on such fee as may be mutually agreed upon between the parties;

(c)        act as receiver if appointed by any court or tribunal:

PROVIDED that no securitisation company or reconstruction company shall act as a manager if acting as such gives rise to any pecuniary liability.

(2) Save as otherwise provided in sub-section (1), no securitisation company or reconstruction company which has been granted a certificate of registration under sub-section (4) of section 3, shall commence or carry on, without prior approval of the Reserve Bank, any business other than that of securitisation or asset reconstruction:

PROVIDED that a securitisation company or reconstruction company which is carrying on, on or before the commencement of this Act, any business other than the business of securitisation or asset reconstruction or business referred to in sub-section (1), shall cease to carry on any such business within one year from the date of commencement of this Act.

Explanation : For the purposes of this section, "securitisation company" or "reconstruction company" does not include its subsidiary.

COMMENTS

In addition to the carrying on of business of securitisation and asset reconstruction, the securitisation or reconstruction company may undertake the activities as provided in cls. (a) to (c)  of sub-s. (1) of s. 10 without incurring any pecuniary liability.  Sub-s. (2) of s. 10 mandates that no other business, than securitisation or reconstruction of asset can be undertaken by the company without prior approval of the Reserve Bank.

11. Resolution of disputes

Where any dispute relating to securitisation or reconstruction or non-payment of any amount due including interest arises amongst any of the parties, namely, the bank or financial institution or securitisation company or reconstruction company or qualified institutional buyer, such dispute shall be settled by conciliation or arbitration as provided in the Arbitration and Conciliation Act, 1996 (26 of 1996), as if the parties to the dispute have consented in writing for determination of such dispute by conciliation or arbitration and the provisions of that Act shall apply accordingly.

COMMENTS

If there is any dispute between securitisation or reconstruction company and Bank/Financial Institution or Qualified Institutional Buyers (QIBs) in respect of securitisation or reconstruction or non-payment of any amount including interest, then such dispute shall be settled by arbitration or conciliation as provided in the Arbitration and Conciliation Act, 1996, as if the parties to the dispute have consented in writing for determination of such dispute by conciliation or arbitration and the provisions of that Act shall apply accordingly.  Hence, dispute between securitisation or reconstruction company, Bank/Financial Institution and QIB cannot be taken to the Civil Court.

12. Power of Reserve Bank to determine policy and issue directions

(1) If the Reserve Bank is satisfied that in the public interest or to regulate financial system of the country to its advantage or to prevent the affairs of any securitisation company or reconstruction company from being conducted in a manner detrimental to the interest of investors or in any manner prejudicial to the interest of such securitisation company or reconstruction company, it is necessary or expedient so to do, it may determine the policy and give directions to all or any securitisation company or reconstruction company in matters relating to income recognition, accounting standards, making provisions for bad and doubtful debts, capital adequacy based on risk weights for assets and also relating to deployment of funds by the securitisation company or reconstruction company, as the case may be, and such company shall be bound to follow the policy so determined and the directions so issued.

(2) Without prejudice to the generality of the power vested under sub-section (1), the Reserve Bank may give directions to any securitisation company or reconstruction company generally or to a class of securitisation companies or reconstruction companies or to any securitisation company or reconstruction company in particular as to--

(a)        the type of financial asset of a bank or financial institution which can be acquired and procedure for acquisition of such assets and valuation thereof;

(b)        the aggregate value of financial assets which may be acquired by any securitisation company or reconstruction company.

COMMENTS

Sec. 45JA of the Reserve Bank of India Act, 1934 empowers the Reserve Bank to determine policy and issue directions.  Under sub-s. (1) of that section, if ÿthe bank is satisfied that, in the public interest or to regulate the financial system of the country to its advantage or to prevent the affairs of any non-banking financial company being conducted in a manner detrimental to the interest of the depositors or in a manner prejudicial to the interest of the non-banking financial company, it is necessary or expedient so to do, it may determine the policy and give directions to all or any of the non-banking financial companies relating to income recognition, accounting standards, making of proper provision for bad and doubtful debts, capital adequacy based on risk weights for assets and credit conversion factors for off balance-sheet items and also relating to deployment of funds by a non-banking financial company or a class of non-banking financial companies or non-banking financial companies generally, as the case may be, and such non-banking financial companies shall be bound to follow the policy so determined and the directions so issued.

Sub-section (2) provides that the bank may give directions to non-banking financial companies generally or to a class of non-banking financial companies or to any non-banking financial company in particular as to--

(a)        the purpose for which advances or other fund based or non-fund based accommodation may not be made; and

(b)        the maximum amount of advances or other financial accommodation or investment in shares and other securities which, having regard to the paid-up capital, reserves and deposits of the non-banking financial company and other relevant considerations, may be made by that non-banking financial company to any person or a company or to a group of companies.

12A. Power of Reserve Bank to call for statements and information

The Reserve Bank may at any time direct a securitisation company or reconstruction company to furnish it within such time as may be specified by the Reserve Bank, with such statements and information relating to the business or affairs of such securitisation company or reconstruction company (including any business or affairs with which such company is concerned) as the Reserve Bank may consider necessary or expedient to obtain for the purposes of this Act.