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

Under the RBI Act, 1934, the Reserve Bank may direct a non-banking financial company to furnish statements and information about the business or affairs of its 'group company'. Which of the following is expressly listed as a relationship making entities a 'group company' under the Explanation to section 45NAA?

Common brand name is expressly a group company relationship under section 45NAA of the RBI Act. It means one entity uses another's registered brand name for business purposes. Sharing an auditor, State or lenders is not listed, so those do not create a group company relationship.

  1. ACommon brand name, meaning usage of a registered brand name of an entity by another entity for business purposesCorrect
  2. BEntities sharing the same statutory auditor
  3. CEntities located in the same State
  4. DEntities having a common bankers' consortium

Explanation

The Explanation to section 45NAA lists seven relationships, including common brand name (usage of a registered brand name by another entity for business purposes). Sharing an auditor, location or a bankers' consortium is not in the list, so those options are wrong.

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