Guidance on NBFC compliances as specified by the RBI

List of NBFC compliances on basis of its type

Conclusion

Difference between banks and NBFC

Requirements for registration with RBI

Submission of Annual Statement and Returns

02 Feb, 2019

Reading Time: 5 Minutes

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.

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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.

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:

It should be a company registered the companies Act, 2013
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

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 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

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.	Particulars	Time limit
1.	Unaudited March Monthly return/NBS7	On or before 30th June
2.	Audited March Monthly	Upon completion
3.	Statutory Auditor Certificate on Income and Assets	On or before 30th June
4.	Information about Cos with FDI/ Foreign Funds	On or before 30th June
5.	Resolution of Non- acceptance of Public deposit	Before the commencement of the new Financial year
6.	File Audited Annual Balance sheet and Profit and loss account	One month from the date of signoff
7.	Declaration of Auditor to Act as Auditor of the Company	Annual basis

Monthly compliance

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

Periodical Compliances

Serial No.	Particulars	Time limit
1.	Appointment of Director	Within 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

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

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

Interest rate sensitivity

Statement shall be filed with the Bank

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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