NBFC compliance annual

Non-Banking Financial Firms are registered under the 2013 Companies Act and are engaged in the business of collecting deposits, loans and advances, buying stocks/bonds/shares, government-issued debentures, and securities. contact Us

NBFC compliance annual : Overview

RBI compliance for NBFCs has been more complicated lately. There used to be a time when banks enjoyed benefits from non-banking financial firms. There was a moment when compliance with NBFCs was much easier and lenient, but RBI drafted new compliance for NBFCs after the Sahara case and kept them under screening. Securitization of standard assets and instructions for a private placement of NBFCs are a portion of the important regulations. RBI continues to bring forward attempts to resist theory in NBFCs. Non-Banking Financial Firms are registered under the 2013 Companies Act and are engaged in the business of collecting deposits, loans and advances, buying stocks/bonds/shares, government-issued debentures, and securities. The NBFCs are actively engaged and registered in the financial operations of the Reserve Bank of India. Without getting a license from the Reserve Bank of India, no NBFC can run its business.

NBFC compliance annual description checklist on compliance

The annual NBFC compliance checklist defines the NBFC compliance due date and returns that every NBFC is required to file. The list is rendered according to the RBI guidelines and master directions. Non-banking financial companies must comply with the compliance later mentioned in this blog, as per the Non-Banking Financial Company Returns (Reserve Bank) Instructions, 2016.

Types of NBFCs on the basis of activities and liabilities

Based on Liabilities

- 1. Deposit Accepting NBFCs;
- 2. Non-Deposit Accepting NBFCs;
- 3. Systematically Important (NBFC-ND-SI);
- 4. Other Non-Deposit Holding Companies;

Based on Activities

1. Infrastructure Finance Company (IFC)
2. Investment and Credit Company (ICC)
3. Systemically Important Core Investment Company (CIC)
4. NBFC- Non-Operative Financial Holding Company (NOFHC)
5. Mortgage Guarantee Companies
6. NBFC-Factors
7. NBFC- Microfinance Companies (MFIs)
8. Infrastructure Debt Fund Non-Banking Financial Company (IDF-NBFC)

Procedure to obtain NBFC Annual Compliance

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Additional Compliances

In addition to the above compliances, there are several other compliances under the provisions of the Companies Act, 2013 that must be observed by all NBFCs PAN-India, which are as follows:

1. ADT-1, Auditor’s Appointment
2. Book and Account Maintenance
3. Holding the Regulatory Registers
4. Drawing up the financial statements
5. Statutory Meetings Convene
6. ITR (Income Tax Returns) Filings
6. AOC-4, Financial Statements Filing
6. MGT-7, Filing Annual Reports ROC (Registrar of Companies)

RBI Notification Applicable on NBFCs

Compliance that applies to the whole NBFC compliance annual regardless of the following functions:

1. Completion of Annual Reports to RBI: All NBFC compliance annual (Non-Banking Financial Institution) must submit their Annual Report within 15 days, from the date of the AGM (Annual General Meeting). Each financial institution must provide its Audited Financial Spreadsheet, as well as the Audited P&L (Profit and Loss Statement) submitted by the company to the Board Meeting. Company directors also need to submit a copy of the Board Report or Directors’ Report to Apex Bank.
2. SAC or Certificate of Examiners: All NBFCs registered with PAN-India are required to collect a certificate from Legal Examiners. This certificate will serve as a declaration that the NBFC compliance annual or Non-Banking Financial Company has performed the functions of the NBFC compliance annual and is included under section 45-IA of the RBI, Act, 1934. Besides, the date on which this certificate is due is one month from the date of completion of the Balance Sheet. However, the time will not exceed December 31.
3. Annual Refund: All NBFC compliance annual receipts that receive or hold deposits must submit an annual refund containing details of the format set by Apex Bank of India.
4. Change of Directors and Directors: If the NBFC compliance annual decides to change its management or directors, then it is compulsory to notify the RBI within 1 month, from the date of the event. Besides, all non-bank financial institutions must submit a written statement, including the following details:
Name and Official Appointment of its Chief Executive Officers.
Name and residential address of company directors.
Sample Signature of Chief Executive Officer authorized to sign on behalf of the Company.

Prudential Regulations

In addition to the above-mentioned compliance with RBI for NBFCs with PAN-India registration, there are some other regulations provided by RBI referred to in Chapter IV of the Master Director. These laws are referred to as the Prudential Regulations. Again, it is mandatory for any NBFC compliance annual to comply with the regulations as follows:

Leverage ratio: In every course of action, all NBFCs other than the NBFC-IFC (Infrastructure Finance Company) and the NBFC-MFI (Micro Finance Institution) must maintain a leverage ratio of up to 7.
Accounting Investments: It is mandatory for the NBFCs’ BOD (Board of Directors) to frame and enforce investment policies for the company. The criteria for categorizing investments into long-term and current investments, for instance.
Frame Policies for Call or Demand Loans: The BOD (Board of Directors) of a pertinent NBFC compliance annual that plans to call or demand loans must frame a policy that will be adopted by the business.
Asset classification: All NBFCs applicable to the RBI Master Directorate under Chapter IV shall identify their assets in classes as follows:
1. Standard Property
2. Assets Sub-Standard directors.
3. Doubtful properties
4. Assets Loss
Standard asset provisioning: Each applicable NBFC compliance annual is expected to include 0.25 percent of the total outstanding provisions on the standard assets.
Multiple NBFCs: All NBFCs applicable to the RBI Master Path under Chapter IV will be aggregated jointly to verify the asset-size threshold of Rs 500 crores.
Company balance sheet disclosures: Each related NBFC compliance annual under Chapter IV of the RBI Master Guidance will have separate disclosure requirements for bad or questionable debts and investment depreciation.
A loan taken against the company’s shares is prohibited: no BFCs applicable to the RBI Master Directorate under Chapter IV can either take over or lend credit against their own shares.

Frequently Asked Questions

What are NBFCs and their forms?

Do CRR and SLR have to be maintained by the NBFC?

For example, non-depositing NBFCs have no requirement for a cash reserve ratio (CRR), nor are they required to maintain a statutory liquidity ratio (SLR). Banks are expected, on the other hand, to maintain a CRR on which they earn no interest and a 24 percent SLR.

How is the NBFC compliance annual raising money?

NBFCs usually collect capital from banks or sell business documents to fund-raise mutual assets. They loan these funds to small and medium businesses, retail customers, etc.

Who controls India’s NBFC?

Within the framework of the Reserve Bank of India Act of 1934, the function and activities of NBFCs are regulated by the Reserve Bank of India (RBI).

Is LIC an NBFC compliance annual company?

Asset Finance Company, Investment Company, Infrastructure Finance Company, Housing Finance Company, Micro Finance Company, etc. are different forms of NBFC. For a layperson, NBFC compliance annual is a financial firm that offers banking services of a different kind but does not have a banking license. For example, non-depositing NBFCs have no requirement for a cash reserve ratio (CRR), nor are they required to maintain a statutory liquidity ratio (SLR). Banks are expected, on the other hand, to maintain a CRR on which they earn no interest and a 24 percent SLR. NBFCs usually collect capital from banks or sell business documents to fund-raise mutual assets. They loan these funds to small and medium businesses, retail customers, etc. Within the framework of the Reserve Bank of India Act of 1934, the function and activities of NBFCs are regulated by the Reserve Bank of India (RBI). Banks are BFCs (Banking and Financial Companies) where, if you are confused, LICI (LIC of India) is an NBFC. The bank deals primarily with deposit and lending matters, while LIC provides the beneficiary with life insurance cover.