The Reserve Bank of India (RBI) has approved Tata Capital Limited’s (TCL) conversion from a non-banking finance company (NBFC)-core investment company (CIC) to which of the following types of companies? (August 2024)

Correct option is C

The Reserve Bank of India (RBI) has approved Tata Capital Limited’s (TCL) conversion into an NBFC-investment credit company (ICC) from its previous NBFC-core investment company (CIC) structure.
Details-
· Merger: This conversion follows TCL’s merger with Tata Cleantech Capital and Tata Capital Financial Services.
· Significance: The change reflects Tata Capital’s transformation into an operating company, positioning it for a potential public listing.
· Previous Structure: Under the CIC structure, TCL primarily functioned as a holding company, which has now been altered with this change to ICC.
· Tata Capital’s Role: The company is a financial and investment services provider, and this conversion allows for greater operational flexibility ahead of future developments like listing.
NBFC-Investment Credit Company (ICC):
· Definition: An NBFC-Investment Credit Company (ICC) is a type of NBFC that is primarily involved in extending credit and making investments.
· Functions: These companies provide loans, credit facilities, and invest in securities of other companies, acting as a lending institution while also managing investment portfolios.
· Difference from CIC: Unlike Core Investment Companies (CICs), which primarily hold investments in group companies, ICCs actively participate in lending and investing activities beyond their group entities.
· Regulatory Oversight: ICCs are subject to RBI regulations and must comply with guidelines related to capital adequacy, asset quality, and liquidity management.