Non-Banking Financial Company (NBFC) Annual Compliance Checklist

RBI Compliance For RBI Registered NBFC

An NBFC, or non-banking financial company, is a vital component of India’s financial system and one of the most well-known organizations that provides loans and other forms of financial support to borrowers. The RBI has a specific set of rules for NBFCs, just like it does for banks. But when events and conditions change, these rules continue to change.

The management and operation of an NBFC must be well aware of these requirements and keep up with them. The NBFCs must follow the compliance checklist at the same time, which is crucial. They will face severe consequences if they fail to follow the RBI checklist. It can potentially result in the NBFC license being revoked. On November 16, 2018, the RBI terminated the registration of 65 NBFCs due to non-compliance, which was one of these problems.

Let’s learn more about the RBI’s NBFC compliance checklist in more depth.

What Does the Annual Compliance Checklist for NBFC Mean?

It specifies the deadline for NBFC compliance and return filing, both of which must be done by NBFCs. According to RBI’s standards and directives, this list has been created.

NBFCs are segmented according to their operations and liabilities:

A Comprehensive Overview of the Various Return Types Filed by NBFCs with the RBI:

• NBFCs that hold public deposits are required to file the NBS-1 Return on a quarterly basis. The goal is to record financial information such as profile and loss, exposure to delicate industries, etc.
• NBS-2 Return: This quarterly report on Prudential Norms must be submitted by NBFCs taking public deposits. The goal is to record compliances with various prudential standards.
• Every NBFC is required to file the NBS-3 Return, which is also a quarterly report. Information on statutory investments in liquid states is included in this return.
• Any rejected business that is still in possession of public deposits is required to file the NBS-4 Return. It’s a yearly return. Prior to this modification, rejected firms had to file NBS-5; today, they must instead file NBS-4.
• The NBS-6 Return is a monthly report that is submitted by NBFCs accepting deposits and having total assets of at least Rs. 100 crores.
• NBFCs that accept public deposits totaling more over Rs. 20 crores must submit half-yearly ALM returns. Additionally, the value of their assets exceeds Rs. 100 crores.
• NBFCs must file yet another report, the Audited Balance Sheet and Auditor’s Report.
• Branch Information Return: Every NBFC that accepts public deposits is required to file this form on a quarterly basis.

The NBFCs-ND-SI must submit the subsequent returns:

• Asset Liability Management (ALM) returns are many returns that are submitted by NBFCs, ND, and SI at various times each year. The structural liquidity statement is one of them.
• Return for Branch Information — This return is made on a quarterly basis.
• Statement of Short Term Dynamic Liquidity is reported on a monthly basis. Interest Rate Sensitivity Format is submitted on a semi-annual basis.
• Mismatched Assets and Liabilities — This is an annual statement
• NBS-7: This quarterly report includes a capital funds statement, a table of risk-weighted assets, a risk asset ratio, and other information.

These are a few of the RBI compliances that NBFCs are required to follow; failure to do so might result in difficulty and penalties.

It is crucial for NBFCs with an RBI license to adhere closely to compliance. The applicant must have a net fund of Rs. 2 crores in accordance with “Section 45-IA” of the RBI Act, 1934. Any NBFC that wants to conduct business in India must seek a license from the RBI; failure to do so might result in fines and license termination. The dates and various return types that NBFCs must submit on a monthly, quarterly, and yearly basis have previously been shown.

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