Indian companies that have been aggressively borrowing through investment arms may soon be restricted from doing so as the banking regulator plans a rule for raising funds.

RBI is concerned about the disproportionately high fund raising by these companies with small capital base.

As per the current regulations companies are not mandated to abide by the stringent norms as finance companies like leasing, hire-purchase and loan companies. Presently companies whose 90 percent or more assets comprise group companies' shares get automatic exemptions from the norms.

An RBI official said that the apex bank was in touch with some corporate groups on the matter and certain rules were under consideration. It is likely that in future overleveraged companies will not be eligible for such exemptions.

One instance of over leveraging is when an investment company pledges the shares of a group company to borrow from a bank or a non-banking finance company (NBFC) and then utilize this money to fund another group entity. In turn, the shares of this newly created entity are pledged to fund yet another company. The holding company is allowed to do this if it pays the interest regularly and maintains margins with the lenders.

Some companies fear that if RBI classifies their investment firms as regular non-banking finance companies, this may adversely impact their ability to raise money from banks and mutual funds.

"The NBFC classification presupposes carrying on the business of investing. The holding companies do not carry on the business, but make strategic investments," said Punit Shah, financial services tax leader, PricewaterhouseCoopers.