MCA Brings NBFC & IFSC Finance Companies under ‘Business of Financing Industrial Enterprises’ [Read Notification]
The latest amendment removes ambiguities regarding the regulatory status of NBFCs and IFSC-registered finance companies
MCA
MCA
The Ministry of Corporate Affairs (MCA) has notified the Companies (Meetings of Board and its Powers) Amendment Rules, 2025 through a notification dated 3 November 2025.
The amended rules primarily expand the scope of, and clarify the definition of the term “business of financing industrial enterprises” as encompassed under Section 186(11)(a) of the Companies Act, 2013.
Further, the amendment modifies Rule 11(2) of the Companies (Meetings of Board and its Powers) Rules, 2014 to explicitly include the lending and guarantee activities of Non-Banking Financial Companies (NBFCs) that are registered with the Reserve Bank of India (RBI) and Finance Companies registered with the International Financial Services Centres Authority (IFSCA), within the ambit of the term “business of financing industrial enterprises.”
Non-Banking Financial Companies (NBFCs) are lending and investment entities that also provide credit facilities but do not hold a full banking licence.
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Similarly, Finance Companies that operate under the International Financial Services Centres Authority (IFSCA) are specialized financial institutions that lend, provide guarantee, and undertake related credit activities within India’s international financial hubs.
The latest amendment is significant as the MCA has removed ambiguity over whether the activities of granting loans, issuing guarantees, or providing securities by NBFCs and IFSC finance entities in their ordinary course of business are exempt from the restrictions under Section 186 that are applicable to other companies.
Most importantly, this amendment aligns the Companies Act framework with the RBI’s IFSCA governing regulations; this is expected to reduce uncertainty in cross-border and specialized lending structures that are operated through India’s financial centres.
This clarificatory amendment is positioned to be an authoritative source, aiding interpretational disputes on the applicability of Section 186 of the Companies Act, 2013, which governs loans, guarantees and investments by companies.
The Companies (Meetings of Board and its Powers) Rules, 2014 were originally notified vide G.S.R. 240(E) dated 31 March 2014, and were last amended by G.S.R. 409(E) dated 15 June 2021 before the current amendment.
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