NBFC registration under statutory criteria cannot be deferred outside Section 45-IA requirements; refusal was restored.

Section 45-IA requires NBFC registration decisions to be tested only against the statutory criteria, including net owned funds and liquidity requirements. An appellate authority cannot defer or dilute a refusal by granting status quo or by relying on later developments outside those parameters, particularly where the applicant's financial incapacity to meet the mandatory conditions is already evident. The order was also internally inconsistent in purporting to keep the rejection in place while suspending its effect, and there was no basis to direct a fresh review after disposal of the appeal. The appellate order was therefore set aside and the original rejection restored.

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Issues: Whether the Appellate Authority's order granting status quo and effectively deferring the rejection of the NBFC registration application was sustainable under Section 45-IA of the Reserve Bank of India Act, 1934.

Analysis: The statutory scheme under Section 45-IA requires the authority to examine the prescribed factors governing grant or refusal of registration, including net owned funds and liquidity considerations. The appellate authority could not travel beyond those statutory parameters or ignore the embargo that the applicant's efforts to satisfy the net-owned-fund requirement cannot remain open-ended. The order also relied on later developments and winding-up proceedings, but those circumstances did not justify interference with the rejection order where the applicant's financial incapacity and inability to meet the statutory requirements were evident on the record. The appellate order was internally inconsistent in continuing the very rejection it purported to suspend, and the direction to review the matter after one year had no sustainable basis once the appeal had already been disposed of.

Conclusion: The Appellate Authority's order was unsustainable and was set aside; the original order rejecting the registration application was restored.

Final Conclusion: The petition succeeded and the rejection of the NBFC registration application stood revived, with the interim orders made absolute.

Ratio Decidendi: An appellate authority exercising power under Section 45-IA of the Reserve Bank of India Act, 1934 must confine itself to the statutory criteria governing registration and cannot postpone or dilute a refusal of registration on considerations outside those criteria, especially where the applicant remains unable to satisfy the mandatory financial requirements.

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