Categories: RBI Consultancy

NBFC Compliance Requirements of RBI

Key NBFC Compliance Requirements (RBI)

Registration and Capital NBFC Compliance Requirement

  • Mandatory Registration: Every Non-Banking Financial Companies must obtain a Certificate of Registration (CoR) from RBI under Section 45-IA of the RBI Act, 1934.
  • Net Owned Fund : IN 10 crore minimum NOF to be maintained by 31 March 2027 & Ab initio INR 10 crore NOF applicable to new NBFC registrations. Continuous monitoring of NOF is required
  • Capital & Prudential Norms: Stricter CRAR, leverage ratios, and exposure limits apply to NBFC-ML and NBFC-UL.  Enhanced supervision for systemically significant Non-Banking Financial Companies.
  • All NBFCs require a Certificate of Registration from RBI under Section 45-IA, with NOF escalating to ₹10 crore (ab initio for new entrants). Scale-based norms apply stricter capital adequacy, leverage ratios, and exposure limits for ML/UL Non-Banking Financial Companies .

  • All non-banking financial companies are required to comply with the Reserve Bank of India’s Scale Based Regulation framework, which classifies non-banking financial companies into layers based on size, activity, and risk profile. The objective is proportionate regulation with increasing supervisory intensity. SBR Classification : Non-banking financial companies are categorized into:

    • Base Layer (BL)

    • Middle Layer (ML)

    • Upper Layer (UL)

    • Top Layer (TL) (to be notified by RBI, if required)

    Each higher layer is subject to stricter prudential, governance, and disclosure requirements.

Quarter 1 (April–June) NBFC Compliance :

  • DNBS13 – Overseas Investment Details: By April 15
  • DNBS02 – Financial & Prudential Parameters: By May 30
  • Fit & Proper Certification (Directors): By April 15
  • FDI Compliance Certificate: By April 15
  • Annual Statement of Directors: By April 15
  • Board Resolutions: Non-acceptance of deposits & Fair Practice Code review: First Board Meeting
  • Portfolio Performance Disclosure: Monthly (Apr, May): Within 15 days
  • CIC Data Submission: Monthly (Mar, Apr, May): Within 15 days

Quarter 2 (July–September) NBFC Compliance :

  • DNBS13 – Overseas Investment Details: By July 15
  • FLA Return (Foreign Liabilities & Assets): By July 15
  • DNBS10 – Statutory Auditor Certificate: Within 1 month of Balance Sheet finalization, not later than Dec 31
  • DNBS02 & DNBS13 (Audited): Same timeline as above
  • Portfolio Performance Disclosure: Monthly (June, July, Aug): Within 15 days
  • CIC Data Submission: Monthly (June, July, Aug): Within 15 days

Quarter 3 (October–December) NBFC Compliance :

  • DNBS13 – Overseas Investment Details: By Oct 15
  • Fit & Proper Certification (Half-year ended Sept 30): By Oct 15
  • FDI Compliance Certificate (Half-year ended Sept 30): By Oct 15
  • Valuation Report: Half-year end
  • Portfolio Performance Disclosure: Monthly (Sept, Oct, Nov): Within 15 days
  • CIC Data Submission: Monthly (Sept, Oct, Nov): Within 15 days

Quarter 4 (January–March) NBFC Compliance :

  • DNBS13 – Overseas Investment Details: By Jan 15
  • Portfolio Performance Disclosure: Monthly (Dec, Jan, Feb): Within 15 days
  • CIC Data Submission: Monthly (Dec, Jan, Feb): Within 15 days

Annual NBFC Compliance  & Reporting Obligations

  • DNBS10, DNBS02, DNBS13 (audited) must be filed within one month of balance sheet finalization, not later than Dec 31.
  • NBFCs must submit periodic regulatory returns through RBI’s XBRL/COSMOS systems, including NBS-1, NBS-2, NBS-9, NBS-10, ALM statements, Statutory Auditors’ Certificates, CRILC reporting for large borrower exposures, Credit Information Companies (CIC) reporting.
  • Submit periodic returns like NBS-1, NBS-2, ALM statements, and auditor certifications to RBI. Non-Banking Financial Companies follow prudential norms on asset classification, provisioning, and CRILC/CIC reporting for large exposures
  • The FLA Return is critical for entities with foreign liabilities/assets.
  • Regular monthly disclosures on portfolio performance and CIC data are mandatory.
  • NBFCs must also comply with prudential norms on Asset classification and provisioning, Income recognition & Stress testing and liquidity risk management

Governance and Operations of Non-Banking Financial Companies Compliance

Implement board-approved internal limits on sector exposures, robust KYC/AML, and cybersecurity for digital lending. NBFC-MFIs benefit from relaxed qualifying asset norms (60% from 75%), while fintech partnerships demand audits on data privacy and fair practices.

  • Board-approved internal exposure limits, including sectoral and group exposure caps

  • Mandatory Audit Committee / Risk Management Committee

  • Robust KYC/AML compliance as per RBI Master Directions

  • Cybersecurity and IT governance, especially for digitally-enabled Non-Banking Financial Companies

Sector-Specific Relaxations & Obligations

  • NBFC-MFIs: Qualifying asset requirement reduced to 60% from 75%

  • Fintech Partnerships / Digital Lending:

    • Mandatory audits on data privacy, customer consent, and fair practices

    • Compliance with Digital Lending Guidelines

Penalties for Non-Compliance of Non-Banking Financial Companies

  • Penalties for Non-Compliance coverer Monetary penalties under RBI Act, supervisory restrictions, & Cancellation of CoR in severe cases
  • Violations attract fines (e.g., INR 76.6 lakh on four NBFCs for P2P lapses) and potential license revocation under RBI Act. Group entities of banks must avoid unregulated activities per 2025 Directions
Tags: NBFC Compliance
9 months ago
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