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

Under Section 45NAA of the RBI Act, 1934, what may the Reserve Bank do in respect of a group company of a non-banking financial company, notwithstanding anything contrary in the Companies Act, 2013?

The Reserve Bank may, at any time, cause an inspection or audit of a group company of an NBFC and its books of account, even notwithstanding the Companies Act, 2013. The section confers no power to remove directors, cancel incorporation or order mergers.

  1. ACause an inspection or audit to be made of the group company and its books of accountCorrect
  2. BRemove the directors of the group company directly
  3. CCancel the incorporation of the group company
  4. DMerge the group company with the NBFC

Explanation

Section 45NAA(2) allows the Bank, at any time and notwithstanding the Companies Act, 2013, to cause an inspection or audit of any group company of an NBFC and its books of account. The section gives no power to remove directors, cancel incorporation or compel a merger.

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