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Compliances Of NBFC

Company Annual Filing

BusinessAid specializes in providing comprehensive compliance solutions for Non-Banking Financial Companies (NBFCs). With a team of seasoned experts and a deep understanding of regulatory requirements, we offer tailored services to help NBFCs navigate the complexities of compliance effectively. From regulatory filings to risk management strategies, we ensure that our clients remain fully compliant with the latest regulations, enabling them to focus on their core business operations with confidence and peace of mind.

Understanding of NBFC Compliance.

RBI compliance for NBFCs has recently gotten more difficult. Previously, non-banking financial companies had an advantage over banks. There was a time when NBFC compliances were far simpler and liberal, but following the Sahara case, the RBI created new compliances for NBFCs and continues to screen them. Significant rules include Securitization of Standard Assets and Guidelines for NBFC Private Placement. RBI continues to put forward attempts to prevent theory in NBFCs.

Non-Banking Financial Companies are registered under the Companies Act 2013, and are involve in the business of receiving deposits, loans and advances, acquisition of stock/bonds/shares, debentures and securities issued by the government. NBFCs are actively involved in the financial activities and are registered by the Reserve Bank of India. No NBFC can run their business without receiving the license from Reserve Bank of India.

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Term 'Principal Business' in an NBFC

The phrase 'Principal Business' refers to financial operations in which a company's financial assets account for more than half of its total assets and income from financial assets exceeds half of its gross income. Any company that meets both of these requirements is qualified to register as an NBFC. However, the RBI has not defined the word "principal business," but it has made it clear that enterprises engaged in financial activity can be registered and overseen by the RBI.

As a result, enterprises that engage in agriculture, the sale and acquisition of goods, the building and sale of immovable property, and industrial activity cannot be regulated and monitored by the RBI because they do not meet the criteria for an NBFC.

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Different Categories of NBFCs Registered with RBI

  1. Investment and Credit Company (ICC)
  2. Mortgage Guarantee Companies (MGC)
  3. Non-Banking Financial Company- Factors
  4. Non-Banking Financial Company-
    Micro Finance Institution (NBFC_MFI)
  5. Infrastructure Finance Company
  6. Systematically Important Core
    Investment Company (CIC-ND-SI)
  7. Investment and Credit Company
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Essential NBFC compliance Checklist for Non-Deposit and Deposit-taking Company

  • In The Case Of Annual Compliance

    • Unaudited March Monthly return/NBS-7 on or before June 30
    • Statutory Auditors certificate on Income and assets with the time limit on or before June 30th
    • Information about companies having FDI or foreign funds with a time limit on or before June 30
    • Audited March monthly return/NBS-7 filed upon completion
    • File audited annual balance-sheet and P&L Account with a time limit of one month from the date of signoff
    • Resolution of Non-Acceptance of Public Deposit with a time limit of before the commencement of the new Fiscal year
    • Declaration of Auditors to Act as Auditors of the Company on an Annual Basis

    Monthly Compliance

    Monthly return by 7th of every month

    Periodical Compliances

    • Appointment of Director: The time limit is within 30 days of appointment
    • Resignation of Director (DIR-12+ challan report) with a time limit of within 30 days from appointment
    • Adoption of any notification in the ensuing Board Meeting and filing the certified copy with RBI

Types of Returns

  • Returns By Deposit Taking NBFC

    NBS-1

    These are the Quarterly returns on deposit in the first schedule. Such return is required to be furnished for the purpose of capturing financial details such as Profit and Loss Account, Components of assets and Liability.

    NBS-2

    The Quarterly Return on prudential norms. The requirement to file this return is to get the details related to several norms like asset Classification, Capital Adequacy, NOF, Provisioning, etc.

    NBS-3

    The Quarterly Return on liquid assets. The intent behind filing such norms is to capture information about statutory investment in Liquid states.

    NBS-4

    The annual return of critical parameters which are by rejected companies those are holding public deposits. The objective behind filing this return is to find the repayment status of the rejected NBFCs accepting public deposits.

    NBS-6

    Needs to be filed as Monthly return on exposure to capital market by deposit-taking NBFC with the total assets of Rs. 100 crore or more.

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ALM Return

  • These returns are file as Half-yearly by NBFC holding Public Deposit which is more than the amount of Rs. 20 Crore or asset size of more than Rs. 100 Crore.

    1. Requires Audited Balance Sheet and Auditor’s Report by NBFC accepting public deposits, to be furnished;
    2. Return related to branch Information

Returns By Non-Deposit NBFC

  • NBS-7

    It is a quarterly statement providing information related to, risk assets ratio, capital funds, and risk-weighted assets.

    NBS-2

    Such a return is the monthly return on a critical financial parameter of NBFCs-ND-SI.

    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

    Quarterly return on important financial parameters of non-deposit taking NBFC having assets of more than ₹ 50 crores and above but less than ₹ 100 crores. The requirements like the name of the company, address, Net Owned Fund, and profit/loss during the last three years need to be furnished quarterly by non-deposit-taking NBFCs with asset sizes between ₹ 50 crores and ₹ 100 crores.

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