MUMBAI :Bharat Nidhi Ltd, the largest shareholder in Bennett, Coleman & Co. Ltd (BCCL) (as of FY22), has recently relinquished its Non-Banking Financial Company (NBFC) licence, nine years after the initial letter to the Reserve Bank of India (RBI) in 2014.

In a list released on Aug. 10, RBI named eight companies that have exited the NBFC business and surrendered their registration certificates. Among them was Bharat Nidhi Ltd, which the company says has been trying to relinquish the license for some time.

Founded in 1942, the company received its NBFC license in October 2002 and as of March 31, 2022 owned 70 million shares of BCCL, a diversified media company that publishes publishers The Times of India. Bharat Nidhi is based in New Delhi and is engaged in the distribution of newspapers and magazines.

“On October 29, 2014, the company voluntarily submitted an application to RBI for the issuance of its registration certificate as an NBFC, since the company is active in the distribution of publications and no longer meets the criteria for classification as an NBFC. “More than 50% of its sales come from the sale of publications,” says its annual report for fiscal year 2022.

Bharat Nidhi said that as a follow-up to the application, RBI ordered them in February 2018 to reduce their financial assets below 50% of their total assets in order to initiate the NBFC registration deletion.

RBI regulations state that financial activities are considered a company’s primary business when financial assets account for more than 50% of total assets and income from financial assets accounts for more than 50% of gross income. A company that meets these two criteria is registered by the RBI as an NBFC. The regulator calls this the 50:50 test and uses it to determine whether a company provides financial services.

“In accordance with the said instructions, in June 2018 the company reduced its financial assets to below 50% of its total assets by repurchasing a portion of its investment in mutual fund shares and placing the redemption proceeds in fixed deposits with banks,” it said.

Following this, the company said it had submitted a letter to RBI confirming compliance with the above requirement. However, before the RBI officially annulled its registration, it had also asked Bharat Nidhi to submit its Amended Memorandum of Incorporation (MOA) after making some changes to the Objects Clause. “Accordingly, the Company amended its Memorandum of Incorporation (MOA) by moving the financial activity clause from its primary objectives to other objectives and submitted an amended MOA to RBI by letter dated June 26, 2019, again requesting RBI to waive the NBFC CoR. “which is still pending before the RBI,” says the annual report.

It made a profit of ₹ 6.7 crore on the back ₹39.2 crore turnover. Net income quadrupled year-on-year in 2021-22. The company has no promoter and shareholders who owned more than 5% as of March 31, 2022 include Matrix Merchandise Ltd, Vineet Jain, Sanmati Properties Ltd, Ashoka Marketing Ltd and Mahavir Finance Ltd.