Recorded RBI impact
Business restriction
Business restriction · Fresh imposition
Published by RBI
13 Sept 2013
Case Brief
After inspecting the company’s books of account and records as on March 31, 2013, RBI issued public-interest directions under Sections 45JA and 45L of the RBI Act, 1934, against First Leasing Company of India Ltd. The directions prohibit the company from selling, transferring, creating charges or mortgages over, or otherwise dealing with its property and assets without prior written permission from RBI. The company is also barred from declaring or distributing dividends, transacting any business, or incurring further liabilities until further orders.
Why RBI Acted
Following inspection of the books of accounts and other records as on March 31, 2013, RBI exercised powers under Sections 45JA and 45L of the RBI Act, 1934, and directed First Leasing Company of India Ltd. to operate under restrictions until further orders. The company was barred from selling, transferring, creating charge or mortgage over, or otherwise dealing with its property and assets without prior written permission of RBI; it could not declare or distribute any dividend, transact any business, or incur any further liabilities.
Operating Impact
First Leasing Company of India Ltd. must comply with the RBI restrictions immediately and continue operating only within the permitted limits, with any asset transactions requiring prior written permission. Shareholders may be affected by the dividend prohibition, and counterparties/creditors are affected because the company cannot undertake new business or incur additional liabilities unless RBI lifts or modifies the directions.
Regulatory Basis
- Sections 45JA and 45L of the Reserve Bank of India Act, 1934
Action Facts
- Primary Impact
- Business restriction
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- NBFC