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Why Are NBFC Compliances Crucial?
Compliance isn’t just a legal obligation; it’s essential for maintaining your license and ensuring your company’s longevity. Failure to adhere to NBFC RBI compliance requirements can lead to severe penalties, operational setbacks, or even the revocation of your NBFC license.
Protect Your Reputation:
Non-compliance can tarnish your reputation. Customers and investors are more likely to trust a company that adheres to RBI regulations.
Ensure Businesss sustainbilty:
Maintaining compliance is vital for business continuity. Non-compliance can jeopardize your license, leading to potential closure.
Reduce Operational Risks: Compliance ensures that NBFCs follow stringent internal controls and risk management practices, reducing the likelihood of fraud, data breaches, and other operational risks.
Mitigate Financial Risks: Non-compliance can lead to hefty fines and legal expenses. Maintaining compliance minimizes these financial risks, allowing resources to be directed toward growth and NBFC portfolio development rather than penalties.
Compliance Checklist for NBFCs
Ensure timely compliance by following THE comprehensive checklist, aligned with RBI norms and directives. Here’s a glimpse of what you’ll need to keep track of:
NBFCs are classified according to their activities and liabilities—
- Infrastructure Debt Fund NBFC (IDF-NBFC)
- Investment and Credit Company (ICC)
- Microfinance Companies (MFIs)
- Mortgage Guarantee Companies
- Infrastructure Finance Company (IFC)
- Core Investment Company (CIC)
- 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)
As shown in the table below, an NBFC must adhere to annual, monthly, and quarterly compliance:
| 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 |
Noted: It is critical for NBFCs granted a licence by the RBI to adhere to stringent compliance. The applicant must have a net fund of Rs. 10 crores. Operating smoothly in India requires each NBFC to obtain a licence from the RBI; failure to do so may result in penalties and license termination.
A Detailed Look at Returns Filed by NBFCs with the RBI
Understanding the various returns required can be daunting. Here’s a quick overview of key returns you must manage:
- NBS-1 Return: Quarterly report for NBFCs holding public deposits, detailing financial status.
- NBS-2 Return: Conformance with prudential standards for public deposit-taking NBFCs.
- NBS-3 Return: Quarterly report on statutory liquid state investments.
- NBS-4 Return: Required from rejected corporations still holding public deposits.
- NBS-6 Return: Monthly report for deposit-accepting NBFCs with total assets over ₹100 crores.
- ALM Returns: Required for NBFCs accepting over ₹20 crores in public deposits.
Failing to comply with these requirements can result in severe penalties and jeopardize your NBFC license.
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
Our expert services, curated for YOU
At NBFC Advisory, we offer a comprehensive suite of services tailored to meet your compliance needs:
Compliance Management:
We provide a structured approach to manage your NBFC RBI compliance requirements efficiently, allowing you to focus on growing your business.
Regulatory Support:
Our experts help you navigate complex regulatory environments, ensuring you meet all RBI requirements with ease.
Custom Audit Services:
conduct thorough audits to assess your NBFC accounting and compliance status to identify areas for improvement.
Risk Assessment:
Our team evaluates potential risks specific to your NBFC portfolio and operations to provide actionable strategies to mitigate them.
Training and Workshops:
We offer training sessions to enhance your team's understanding of compliance requirements and best practices.
Get started on your NBFC Compliances right now!!
Why NBFC advisory?
Before NBFC Advisory
- Overwhelmed by complex compliance requirements
- Difficulty in keeping up with frequent regulatory changes
- Fear of reputational damage due to compliance failures
- Risk of legal penalties due to non-compliance
- Constantly chasing deadlines
After NBFC Advisory
- Streamlined compliance management tailored to your needs
- Expert guidance that clarifies regulatory obligations
- Direct support in liaising with regulatory bodies
- Access to legal experts to mitigate risks and penalties
- Proactive support to ensure you stay ahead of compliance deadlines
Schedule 30-minute call with our expert
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.
Get Started and Simplify Your NBFC Compliance!
Our mission is to Make it Count. Don’t allow compliance challenges to hinder your progress. With NBFC Advisory at your side, you can be compliant and confident, and boost your organization to achieve its full potential!
Simplifying Regulations, Empowering Growth
Frequently Asked Questions (FAQs)
NBFC compliance refers to the adherence to regulations and guidelines set by the Reserve Bank of India (RBI) for Non-Banking Financial Companies. This includes ensuring proper NBFC accounting, timely submissions of returns, audits, and maintaining comprehensive documentation to remain aligned with NBFC RBI compliance requirements.
The frequency of compliance reports varies—monthly, quarterly, and annually—depending on the specific requirements of NBFC RBI compliance. Proper NBFC accounting systems help streamline these submissions.
We offer tailored compliance management services, regulatory support, audits, risk assessments, and training to help you sail the complexities of NBFC compliance.
Immediately address the issue by consulting with compliance experts. Taking corrective action promptly can help mitigate potential penalties and demonstrate good faith in maintaining compliance.
Simply reach out through our contact form, and one of our experts will guide you through the next steps!
NBFCs must adhere to various regulatory requirements, including maintaining capital adequacy, filing returns (NBS-1, NBS-2, etc.), and ensuring adherence to RBI guidelines.
Non-compliance can lead to significant penalties, including fines, operational restrictions, or even cancellation of your NBFC license, which can severely impact your business operations.
Yes, risk assessments are essential for identifying potential risks within your operations or NBFC portfolio. They allow you to implement strategies to safeguard against financial and operational challenges.
Regularly monitor the RBI’s official website and subscribe to industry news platforms. Additionally, working with a compliance advisory firm like NBFC Advisory can help you stay informed about any regulatory changes affecting NBFCs.
