Source: ET
Context:
- RBI is allowing, on a case-by-case basis, the transfer of ownership of NBFCs or Core Investment Companies (CICs) to family trusts.
- Earlier, RBI was hesitant due to concerns over opacity of trusts and hidden control shifts.
- Objective: Facilitate succession planning and orderly wealth management in family-run businesses while maintaining regulatory oversight.
Key Provisions
| Feature | Details |
|---|---|
| Trustees | Must be family members; professional/external trustees generally not permitted. |
| Control Transfer | Ownership/control can be transferred to trusts; RBI approval required for significant change (≥26%). |
| Regulatory Oversight | Ensures no hidden or informal control passes to outsiders. |
| Compliance with SEBI Rules | For trusts holding listed company shares, SEBI disclosure & open offer norms must be followed. |
| Objective | Support succession planning, transparency, and family legacy preservation. |
Significance
- Recognizes modern corporate-family structures and evolving wealth-holding practices.
- Enables smooth inter-generational transfer of assets and minimizes family disputes.
- Improves regulatory clarity and transparency for NBFCs/CICs owned via family trusts.
- Balances family autonomy with RBI oversight to prevent misuse or hidden control.
