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Why NBFC Compliances are Important?
NBFCs are one of India's most frequent types of financial institutions, and they provide a significant portion of the country's GDP growth. It is just as crucial to follow up with the NBFC yearly compliance checklist to secure an NBFC licence for starting a Non-Banking Financial Company.
Moreover, if you don't follow up with the NBFC compliance, you must pay hefty penalties, and it may even result in the company's collapse or the revocation of its NBFC licence.
As a result, if you're running an NBFC, make sure you have a current NBFC yearly compliance checklist.
The checklist will assist you in filing your taxes on time. As a result, we've compiled a comprehensive list of NBFC annual compliance requirements so that you can avoid penalties by filing returns on time.
Annual Compliance Checklist for NBFCs
It establishes the deadline for NBFC compliance and the filing of required returns. This list is compiled in accordance with RBI norms and directives. NBFCs are classified according to their activities and liabilities:
- Non-Deposit Accepting NBFCs
- Other Non-Deposit Holding Companies
- Deposit Accepting NBFCs
- Systematically Important (NBFC-ND-SI)
- Infrastructure Debt Fund NBFC (IDF-NBFC)
- Investment and Credit Company (ICC)
- Non-Operative Financial Holding Company (NOFHC)
- Microfinance Companies (MFIs)
- Mortgage Guarantee Companies
- Infrastructure Finance Company (IFC)
- Core Investment Company (CIC)
An NBFC must adhere to annual compliance, monthly compliance, and quarterly compliance, as shown in the table below.
| PARTICULARS | TIMELINE |
|---|---|
| Unaudited March Monthly return/NBS7 | By 30th June |
| Audited March Monthly return/NBS7 | Upon completion |
| Statutory Auditors certificate on Income & Assets | By 30th June |
| Information about Cos having FDI/Foreign Funds | By 30th June |
| File Audited Annual Balance Sheet and P&L Account | One month from the date of signoff |
| Declaration of Auditors to Act as Auditors of the Company | Annually |
| PARTICULARS | TIMELINE |
|---|---|
| Monthly Return | It must be done on the 7th of every month |
| PARTICULARS | TIME LIMIT |
|---|---|
| Director’s Appointment | Within 30 days of appointment |
| Resignation of Director (DIR-12 + Challan Receipt) | Within 30 days of resignation |
| Adoption of any notification in the ensuing Board Meeting & filing the certified copy with RBI |
An in-depth look at the various types of returns filed by NBFCs with the RBI
- NBS-1 Return: NBFCs that hold public deposits must file this report every quarter. The goal is to record financial information such as profile and loss, exposure to sensitive industries, etc.
- NBS-2 Return: NBFCs taking public deposits must submit this return to Prudential Norms every quarter. The goal is to document conformity with various prudential standards.
- NBS-3 Return: Every NBFC is required to file this quarterly report. This return contains information on statutory liquid state investments.
- Any rejected corporation that still has public deposits must file the NBS-4 return. It’s a once-a-year payment. Rejected companies previously filed NBS-5. However, this has recently been modified to NBS-4.
- NBS-6 Return: This is a monthly report filed by NBFCs that accept deposits with total assets of Rs. 100 crores or above.
- ALM Returns Every Half-Year: This return is required for NBFCs that accept more than Rs public deposits. 20 crore. In addition, their total assets exceed Rs. 100 crores.
- Another report that NBFCs must file is the audited balance sheet and auditor’s report.
- Every NBFC that accepts public deposits must file a quarterly Branch Information Return.
- Every NBFC that accepts public deposits is required to file a quarterly Branch Information Return.
NBFCs-ND-SI must submit the following returns:
- The structural liquidity statement is submitted once a year.
- Returns from ALM- Asset Liability Management refer to NBFCs-ND-SI submitting numerous returns.
- Branch Information Return is a quarterly return that must be submitted.
- The statement of short-term dynamic liquidity is submitted monthly, and the interest rate sensitivity format is submitted every six months.
- Mismatch of Assets and Liabilities- This is an annual statement.
- ü NBS-7- This quarterly report includes a capital fund statement, risk-weighted assets, risk asset ratio, and other information
Get started on your NBFC Compliances right now!!
These are some of the RBI compliances that NBFCs must follow; failure to do so could land them in hot water and result in a penalty.
It is critical for NBFCs that have been granted a licence by the RBI to adhere to stringent compliance. The applicant must have a net fund of Rs. 10 crores
To operate smoothly in India, each NBFC must get a licence from the RBI; failure to do so may result in a penalty and license termination.
