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CMA Final · Corporate and Economic Laws · Laws and Regulations related to Banking Sector

The Reserve Bank wishes to inspect the books of account of a group company of an NBFC. Which statement is correct under Section 45NAA of the RBI Act, 1934?

The Bank may cause an inspection or audit of the group company and its books at any time, notwithstanding the Companies Act, 2013. Section 45NAA(2) gives this power directly, so no consent of the group company or approval of the Registrar is needed.

  1. AThe Bank may cause an inspection or audit of the group company and its books of account, notwithstanding anything to the contrary in the Companies Act, 2013Correct
  2. BThe Bank may inspect only if the group company first consents in writing
  3. CThe Bank may only direct the NBFC to furnish statements and has no power of inspection over the group company
  4. DThe Bank must first obtain the approval of the Registrar of Companies

Explanation

Section 45NAA(2) lets the Bank, at any time and notwithstanding the Companies Act, 2013, cause an inspection or audit of any group company of an NBFC and its books of account. No consent or Registrar approval is required. Option C ignores sub-section (2) and confuses it with the information-furnishing power in sub-section (1).

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