MUMBAI : Bharat Nidhi Ltd, the largest shareholder of Bennett, Coleman & Co. Ltd (BCCL) (as of FY22), was recently able to give up its non-banking financial company (NBFC) licence, nine years after it first wrote to the Reserve Bank of India (RBI) in 2014.
In a list published on 10 August, RBI named eight companies which have exited the NBFC business and have surrendered their certificates of registration. Among these was Bharat Nidhi Ltd, which, according to the company’s disclosures, has been trying to surrender the licence for a while now.
Founded in 1942, the company received its NBFC licence in October 2002 and as on 31 March 2022, held 70 million shares in BCCL, a diversified media company that publishes The Times of India. Based in New Delhi, Bharat Nidhi is engaged in the distribution of newspapers and magazines.
“The company had voluntarily made an application on 29 October 2014 to the RBI for surrender of its certificate of registration as NBFC, as the company is engaged in the business of distribution of publications and no longer meets the criteria for classification as a NBFC as more than 50% of its revenue is from the sale of publications,” it said in its FY22 annual report.
Bharat Nidhi said as a follow up to the application RBI had in February 2018 directed it to reduce its financial assets below 50% of its total assets in order to initiate cancellation of NBFC registration.
RBI regulations state that financial activity will be considered the principal business of a company when financial assets constitute more than 50% of the total assets and income from financial assets constitute more than 50% of the gross income. A company which fulfils both these criteria will be registered as NBFC by RBI. The regulator refers to this as the 50-50 test and applies it to establish whether a company is into financial services.
“In accordance with the said directions in June 2018, the company reduced its financial assets below 50% of its total assets by way of redeeming some of its investments in mutual fund units and depositing the redemption proceeds into fixed deposit with banks,” it said.
Following this, it said it submitted a letter to the RBI confirming the compliance of the above requirement, however, before formally cancelling its registration, RBI had also asked Bharat Nidhi to submit its amended memorandum of association (MOA) after incorporating some changes in the objects clause. “Accordingly, the company altered its memorandum of association (MOA) by shifting the financial activity clause from its main objects to other objects and has submitted amended MOA with RBI vide its letter dated 26 June 2019 and again requested RBI for cancellation of the NBFC CoR which is still pending before the RBI,” the annual report said.
It posted a profit of ₹ 6.7 crore on the back of ₹39.2 crore in revenues. Its net profit quadrupled on a year-on-year (y-o-y) basis in 2021-22. The company does not have a promoter and some of the shareholders who owned more than 5% as on 31 March 2022 include Matrix Merchandise Ltd, Vineet Jain, Sanmati Properties Ltd, Ashoka Marketing Ltd and Mahavir Finance Ltd.
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Updated: 30 Aug 2023, 10:30 PM IST
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