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Soumya Bajpai
| Updated: 02 Feb, 2019 | Category: NBFC

Guidance on NBFC compliances as specified by the RBI

Guidance on NBFC compliances as specified by the RBI

Section 45-IA of the RBI Act, 1934, Non-banking Financial Company cannot commence or carry on business of a non-banking financial institution without obtaining a certificate of NBFC registration from the RBI and without having a Net Owned Funds of ₹ 2 crore since April 1999. However, in terms of the powers NBFC compliances are regulated by RBI, whereas certain categories of NBFCs which are regulated by other regulators are exempted from the requirement of registration with RBI such are:

  • Venture Capital Fund/Merchant Banking companies/Stock broking companies registered with SEBI, Insurance Company holding a valid Certificate of Registration issued by IRDA
  • Nidhi companies as notified under Section 620A of the Companies Act, 1956, Chit companies as defined in clause (b) of Section 2 of the Chit Funds Act, 1982
  • Housing Finance Companies regulated by National Housing Bank, Stock Exchange or a Mutual Benefit company.

Difference between banks and NBFC

NBFCs lend and make investments and hence their activities are akin to that of banks; however there are a few differences as given below:

  • NBFC cannot accept demand deposits;
  • NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself;
  • Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of NBFCs, unlike in case of banks.

Requirements for registration with RBI

A company incorporated under the Companies Act, 1956 and desirous of commencing business of non-banking financial institution as defined under Section 45 I(a) of the RBI Act, 1934[1] should comply with the following:

  1. It should be a company registered the companies Act, 2013
  2. It should have a minimum net owned fund of ₹ 2 crore. (The minimum net owned fund (NOF) required for specialized NBFCs like NBFC-MFIs, NBFC-Factors

List of NBFC compliances on basis of its type

 

Submitted By Non-Deposit Taking NBFC’s Having Asset Size Between Rs. 50 Crores To Rs. 100 Crores

Form Name

Purpose of the Form

Department

 

Quarterly Return

 

Quarterly Return by Non-Deposit taking NBFC’s with asset size of Rs.50 to 100 Cr.

 

RBI

 

Submitted By Non-Deposit Taking NBFCs Having Assets Of Rs. 100 To Rs.500 Crores

Form Name

Purpose of the Form

Department

 

NBS8

 

Annual Return on Non-Deposit taking NBFC’s with asset size of Rs.100 to 500 Cr.

 

RBI

 

Submitted By NBFC-Nd-Si Having Asset Size Below Rs 100cr

Form Name

Purpose of the Form

Department

NBS­9

Annual Return on NBFC­-ND­-SI with Asset Size Below Rs.100 Cr

RBI

Non-­Deposit Taking NBFCs Si Department (Rbi)

Form Name

Purpose of the Form

Department

Monthly Return

Monthly Return with asset size of Rs.100 CR. & above

RBI

NBS_ALM­1

Statement of Short term dynamic liquidity (Within 10 days of the end of every month)

RBI

NBS­7

Quarterly Statement of Capital Funds, Risk-Weighted Assets and risk assets Ratio etc. Unaudited Monthly return/audited Unaudited Monthly return NBS-7

Unaudited Monthly (On or before 30th June)

Audited monthly return (Upon completion)

SA & CEO certificate for NBS­7

Certifying NBS­7 (Statutory Auditors certificate on Income & Assets)

On or before 30th June

NBS_ALM­3

Interest rate sensitivity

Statement shall be filed with the Bank

ALM Return

 

Asset liability mismatches and interest rate exposure

RBI

NBFC Monthly Compliances Submitted By All Non­Deposit Taking NBFCs Si

Form Name

Purpose of the Form

Department

Monthly Return

Monthly Return on NBFC­-ND­SI with asset size of Rs.100 CR. & above

RBI

NBS_ALM­1

Statement of Short term dynamic liquidity to be filed within 10 days of the closer month

RBI

To Be Submitted By All Deposit-Taking NBFC’s Having Asset Size Above Rs. 100 Crores Or Public Deposits Of Rs. 20 Crores And Above

NBS­6

Monthly Return stating Exposure to Capital Market

RBI

NBFC Nd Si Quarterly Compliances

Form Name

Purpose of the Form

Department

 

To Be Submitted By All Deposit-Taking Nbfc’s Except Residuary Nbfc

NBS 1

Quarterly Return on Material Financial Parameters of Deposit Taking NBFCs

RBI

NBS ­2

Quarterly Statement of Capital Funds, Risk Assets/Exposures and risk assets Ratio.

RBI

NBS­ 2: CA & CEO Cert.

Certifying NBS ­2

RBI

NBS 3

Quarterly Return on Statutory Liquid Assets

RBI

 

To Be Submitted By All Residuary Non­-Banking Companies

NBS 3A

Quarterly Return on Statutory Liquid Assets

RBI

 Quarterly Return I

Return of investments

RBI

 

Submitted By All Non-Deposit Taking NBFCs

NBS -7

Quarterly Statement of Capital Funds, Risk-Weighted Assets and risk assets Ratio etc.

RBI

NBS­-7: SA & CEO Cert.

Certifying NBS -7

RBI

 

Submitted By NBFCs Having An Asset Size Between 50  To 100 Crore

Quarterly Return

Quarterly Return by NBFC-­ND with asset size of Rs.50 ­ 100 Cr.

RBI

 

Submitted By All Securitization And Reconstruction Company

SCRC

Quarterly statement of assets acquired/ securitized/ reconstructed  

RBI

NBFC Nd Si Half Yearly Compliances

Form Name

Purpose of the Form

Department

 

To Be Submitted By All Deposit-Taking NBFC’s Having Asset Size Rs. 100 Crores Or More Or Public Deposits Of Rs. 20 Crores And Above

NBS_ALM­2

Details of any mismatches in Assets, liabilities and interest rate exposure (Within 20 days of the closure of half year)

The regional office of the Department in whose jurisdiction NBFC is registered

 

Submitted By All Non-Deposit Taking Nbfcs

NBS_ALM­3

Interest rate sensitivity

Statement shall be filed with the Bank

 

NBFC Yearly Compliances

Form Name

Purpose of the Form

Department

Submitted by all non-deposit taking NBFCS

ALM Return

Asset liability mismatches and interest rate exposure

RBI

Submitted by all residuary non­banking companies

Form  ­NBS 1A

Annual Return on Deposits (Filed annually after March 31 and latest by September 30)

Regional Office of Department of Non­-Banking Supervision, RBI where registered office of the company is situated

Submitted by NBFCS having the asset of Rs 100 to Rs 500 Cr

NBS­8

Annual Return on Non-Deposit taking NBFC With Asset Size from Rs.100 Cr. To 500 Cr

RBI

Submitted by NBFCS having asset size below Rs 100 Cr

NBS­9

Annual Return on NBFC­ND­SI With Asset Size Below Rs.100 Cr

RBI

Submitted by all non­banking financial companies accepting/holding public deposits, and MNBCS except residuary non­banking companies

NBS­4

Repayment of Deposits only in respect of rejected/canceled companies

Department of Non­-Banking Supervision, RBI

CA certificate form NBS – 4

Certifying NBS­4

RBI

Nbfc Under Companies Act, 2013

Form Name

Purpose of the Form

Department

E-­Form MGT-­7

Annual Return (Within 60 days of conclusion AGM)

ROC

E-­Form AOC­-4

Filing of annual financials i.e. Balance Sheet & Profit & Loss statement (Within 30 days of conclusion of AGM)

ROC

E­-Form DIR-­12

If there is any change in Directors (Within 30 days of the date of that change)

ROC

Submission of Annual Statement and Returns

NBFC-ND-SI (Non- Deposit category) will submit an annual statement of capital fund, risk assets ratio and other reports electronically as well as physically. The capital adequacy of 15% is to mandatorily maintain with the disclosures in the balance sheet as a submission of annual statement and returns.

  • Annual Compliance of Returns
Serial No.ParticularsTime limit
1.Unaudited March Monthly return/NBS7On or before 30th June
2.Audited March MonthlyUpon completion
3.Statutory Auditor Certificate on Income and AssetsOn or before 30th June
4.Information about Cos with FDI/ Foreign FundsOn or before 30th June
5.Resolution of Non- acceptance of Public depositBefore the commencement of the new Financial year
6.File Audited Annual Balance sheet and Profit and loss accountOne month from the date of signoff
7.Declaration of Auditor to Act as Auditor of the CompanyAnnual basis
  • Monthly compliance

On every 7th of month the company needs to file their monthly returns

  • Periodical Compliances
Serial No.ParticularsTime limit
1.Appointment of DirectorWithin 30 day of appointment
2.Resignation of Director (DIR-12+challan receipt)Within 30 days of resignation
3.Adoption of any notification in the ensuring board meeting and filing the certified copy with RBI 

Conclusion

Reserve Bank of India has deregulated interest rates to be charged to borrowers by financial institutions (other than NBFC- Micro Finance Institution). The rate of interest to be charged by the company is governed by the terms and conditions of the loan agreement entered into between the borrower and the NBFCs. We have tried to give you the best research to our knowledge on NBFC compliances. You could consult the Corpbiz professional before going down the road of commencement of NBFC, we are happy to entertain your query.

Read our article:Prerequisites of NBFC Registration: A Comprehensive Overview

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Soumya Bajpai

Soumya has done LLB (Hons) and has a 2+years experience in writing. Her main interest is in reading judgments, new enactments and amendments taking around in law. She always strives to bring the best to work that she does.

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