RBI vide its circular no DNBR (PD) CC No.021/03.10.001/2014-15 dated 20th February 2015 issued guidelines on private placement of Non-Convertible Debentures (NCDs) (maturity more than 1 year) by NBFCs, keeping in view the provisions provided under the Companies Act 2013. The guidelines are issued in supersession of earlier issued guidelines vide circular no DNBS(PD)CC.No.330/03.10.001/2012-13 dated June 27, 2013 and the DNBS (PD)CC.No.349/03.10.001/2013-14 dated July 02, 2013

The gist of guidelines is provided below:

• NBFCs shall put in place a Board approved policy for resource planning which, inter-alia, should cover the planning horizon and the periodicity of private placement.
• The minimum subscription per investor shall be Rs. 20,000 (Rupees Twenty thousand);
• The issuance of private placement of NCDs shall be in two separate categories, those with a maximum subscription of less than Rs. 1 crore and those with a minimum subscription of Rs. 1 crore and above per investor;
• There shall be a limit of 200 subscribers for every financial year, for issuance of NCDs with a maximum subscription of less than Rs. 1 crore, and such subscription shall be fully secured;
• There shall be no limit on the number of subscribers in respect of issuances with a minimum subscription of Rs. 1 crore and above; the option to create security in favour of subscribers will be with the issuers. Such unsecured debentures shall not be treated as public deposits as defined in NBFCs Acceptance of Public Deposits (Reserve Bank) Directions, 1998.
• An NBFC (excluding Core Investment Companies) shall issue debentures only for deployment of funds on its own balance sheet and not to facilitate resource requests of group entities / parent company / associates.
• An NBFC shall not extend loans against the security of its own debentures (issued either by way of private placement or public issue).
• Tax exempt bonds offered by NBFCs are exempted from the applicability of the circular.
• For NCDs of maturity upto one year, guidelines on Issuance of Non-Convertible Debentures (Reserve Bank) Directions, 2010, dated June 23, 2010, by Internal Debt Management Department, RBI shall be applicable.