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NBFC Compliance

NBFC or Non-Banking Financial Companies or NBFCs are companies which are involved in the business of receiving deposits, advances and loan, and acquisition of stock, shares and bonds, debentures and securities that granted by the government and are registered under the Companies Act 2013. There was a time when Annual Compliances of NBFCs in India were far simpler and indulgent but after the Sahara case, RBI has declared new NBFC compliances under their screening. To make the process easy, get the guidance from our expert team!

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Overview
Types
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NBFC Compliance - Overview

Non-Banking Financial Companies or NBFCs are companies which are registered under the Companies Act 2013, which are involved in the business of receiving deposits, advances and loan, and acquisition of stock, shares and bonds, debentures and securities that granted by the government. NBFCs are registered by the Reserve Bank of India and are actively involved in financial activities. NBFCs are not permitted to can run their business without obtaining the license from RBI or Reserve Bank of India.

Recently, RBI compliances have turned into more complex for NBFCs. Before, NBFCs or Non- Banking Financial Companies used to enjoy the benefits over banks. And also NBFCs compliances were very simple and lenient but later on, after Sahara case, RBI has outlined new compliances for NBFCs and regulated them under their screening. A portion of the significant rules and regulations are Securitization of Standard Assets and Guidelines for Private Placement of NBFCs. RBI is going forward putting forth efforts and attempts for preventing theory in NBFCs.

Types of NBFCs or Non-Banking Financial Companies

The types of NBFC or Non-Banking Financial Companies on the basis of Liabilities and
Activities are mentioned below:

  • Deposit Accepting NBFCs
  • Systematically Important (NBFC-ND-SI)
  • Non-Deposit Accepting NBFCs
  • Other Non-Deposit Holding Companies
  • NBFCs based on Activities
  • Investment and Credit Company (ICC)
  • Infrastructure Finance Company (IFC)
  • Systemically Important Core Investment Company (CIC)
  • Mortgage Guarantee Companies
  • NBFC- Non-Operative Financial Holding Company (NOFHC)
  • NBFC- Microfinance Companies (MFIs)
  • NBFC-Factors
  • Infrastructure Debt Fund Non-Banking Financial Company (IDF-NBFC)

Annual Compliance of NBFCs

The Annual Compliance of NBFCs or Non-Banking Financial Companies has been made efficient and stricter, to ensure the transactions both for their consumers and the government with lesser risk factors by disclosing the annual statements and returns.
NBFC-ND-SI (Non-Deposit category) is mandatory to file the annual documents and statements of capital funds and also risk asset ratio between others. Apart from these, the disclosure norms such as capital adequacy and liquidity are the other new additions which are recently added to the in the NBFC-ND Companies Prudential Norms Directions, 2007. Capital adequacy of the company has to be maintained at 15%

Particulars: Unaudited March Monthly Return/NBS7
Time Limit: On or before 30th June

Particulars: Statutory Auditors Certificate on Income and Assets Time Limit: On or before 30th June
Particulars: Information about Cos having FDI/Foreign Funds Time Limit: On or before 30th June
Particulars: Resolution of Non-acceptance of Public Deposit Time Limit: Before the commencement of the new Financial year
Particulars: Audited March Monthly Return Time Limit: Upon Completion
Particulars: Declaration of Auditors to Act as Auditors of the Company Time Limit: Annual basis
Particulars: File Audited Annual Balance Sheet and P&L Account Time Limit: One month from the date of signoff

Monthly Compliances of NBFC-ND(Non-Deposit taking)

Particulars: Monthly Return Time Limit: by 7th of every month
Particulars: Upload monthly Time Limit: by 7th of every month

Periodical Compliances of NBFC-ND(Non-Deposit taking)

Particulars: Appointment of Director(Annexure-III) Time Limit: within 30 days of appointment
Particulars: Upload monthly return Time Limit: within 30 days of appointment

Types of Returns

Returns By Deposit Taking NBFC

NBS-1

Quarterly returns required for the purpose of capturing financial information such as Components of assets and Liability, Profit and Loss Account.

NBS-2

Quarterly Return as per the prudential norms. The purpose of this return is to get information about several norms such as asset Classification, NOF, Capital Adequacy, Provisioning, and so on.

NBS-3

Quarterly Return on liquid assets and such norms are required to capture information about statutory funds and investment in Liquid states.

NBS-4

Annual return of critical parameters. The purpose of filing this return is to capture the repayment status of the rejected NBFCs which are accepting public deposits.

NBS-6

This form needs to be submitted as Monthly return on picture to capital market by NBFC deposit-taking with the value of the total assets of Rs. 100 crore or more than that..

ALM Return

These returns have to be filed as Half-yearly by NBFC which are holding Public Deposit with the amount more than Rs. 20 Crore or size of the asset more than Rs.100 Crore.

1. This return needs Audited Balance Sheet and authorized Auditor’s Report by NBFC accepting public deposits, to be submitted;

2. Return related to branch details

Checklist For NBFC- D(Deposit-Taking)

Likewise, Non-deposit NBFCs, NBFC-D (Deposit Taking) institutions also have to submit a few annual returns and are based on deposits agreed by the company.

Returns By Non-Deposit NBFC are mentioned below:

NBS-7

Quarterly return or statement that provides information related to, capital funds, risk assets ratio, risk-weighted asset and so on.

NBS-2

Monthly return on a critical financial parameter of the company or NBFCs-ND-SI. ALM Returns.

ALM Returns

1. Monthly- statement of short-term dynamic liquidity in format NBS-ALM-1

2. Half Yearly- Statement of structural liquidity in format NBS-ALM2

3. Half Yearly- Statement of interest rate sensitivity in format NBS-ALM-3

Branch Info Return

Branch Info Return: Quarterly return on critical financial parameters of NBFC non-deposit taking owning assets more than Rs. 50 crores but less than Rs.100 crores. The required documents are the name of the company, Net Owned Fund, address and profit and loss during the last three years need to be submitted or filed quarterly by non-deposit taking NBFCs with the size of the asset between Rs.50 crores and Rs.100 crores.

Frequently Asked Questions

NBFCs normally accept money from banks or sell business papers or documents to shared assets to raise funds. Then the company will on-loan these funds into little and medium business or enterprises, retail clients, etc.
Banks are BFCs or Banking and Financial Companies while LIC of India is an NBFC. The bank is mainly dealing with a matter relating to lending and depositing money whereas LIC provides a life insurance cover to the done or beneficiary.
NBFC or Non-Banking Financial Companies represents non-banking financial institutions which perform capacities such as banks without banks in rural regions. MFI is miniaturized scale account establishments which work at a further littler level than Non-Banking Financial Companies or NBFC. MFI provides little credits to the persecuted segments of the general or rural public.
NBFCs can provide services like loans and credit facilities, retirement underwriting, planning, currency exchange, money markets and merger business activities.
All the operations of NBFCs are regulated and managed by the Reserve Bank of India (RBI) under the framework of the Reserve Bank of India Act, 1934.
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