What is core investment company?

Core Investment Companies are limited companies holding equity shares, preference shares or debentures in other group companies. Often such companies are mainly establishing as group businesses and who controls the subsidiaries by holding majority shareholding and is defined as NBFCs by the RBI. Core investment company can not do trading of shares or debentures. RBI now approves that only those CICs having a net asset size of Rs.100 crore and above shall be recognized as systemically important core investment companies.

Core investment company can be classified in following categories

What is the registration requirement for core investment companies?

What is Minimum Capital Adequacy Ratio and Leverage Ratio?

Leverage Ratio: Core investment companies are required to ensure that its total outside liabilities do not exceed 250% of adjusted net worth on the 1st April of the financial year.

Capital Adequacy Ratio: For every CIC-SI minimum capital adequacy ratio should be 30% of the adjusted net worth. Adjusted net worth means considering all off balance sheet item.

What is the adjusted Net worth?

Following calculation, need to be understood to calculate the adjusted Net worth as Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007.

50% of the unrealized appreciation in the book value of quoted investments as at the date of the last audited balance sheet

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