Apoorv Singh, GLA University, Mathura
Overview of Core Investment Company:
The Reserve Bank of India classifies a Core Investment Company (CIC) as a Non-Banking Financial Company (NBFC) (RBI). These businesses cannot trade these securities or engage in any other type of financial activity; instead, they typically invest in shares of their own group firms to hold stakes in them. These businesses invest in shares with no intention of engaging in any trading-related activity. Such share purchases are typically made to acquire ownership interests in the group firms.
Therefore, the majority of these companies' investments are in group companies. Usually, the group of enterprises holds 90% of the equity. Such a stake is held in the form of preference shares, equity shares, and other types of shares. A holding or component thereof cannot represent less than 60% of the company's assets.
Despite being under RBI regulation, these businesses don't engage in any borrowing or lending- related operations. These businesses were subject to the same NBFC regulation up until the year 2010. However, the RBI created a unique structure in 2010 to control how Core Investment Companies operate.
