corporate law
Published on 9 April 2025
Essential Compliance Guide for Non-Banking Financial Companies (NBFCs) in India
Introduction
Non-Banking Financial Companies (NBFCs) function under a regulatory framework set by the Reserve Bank of India (RBI). To ensure compliance, these entities must adhere to various filing requirements and deadlines mandated by the RBI. This article provides a comprehensive guide for compliance officers, CFOs, and company secretaries within the NBFC sector, outlining crucial insights into the regulatory environment and necessary filings for compliance.
Understanding NBFCs
A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956, involved in activities such as:
- Providing loans and advances
- Acquiring shares, stocks, bonds, debentures, or other marketable securities issued by the government or local authorities
- Engaging in leasing, hire-purchase, insurance, or chit businesses
However, it does not include institutions primarily focused on agricultural activity, industrial activity, sale or purchase of goods (outside securities), provision of services, or sale/construction of immovable properties. Additionally, any non-banking institution classified as a company that primarily accepts deposits under any scheme in one lump sum or through installments is also considered an NBFC, specifically referred to as a residuary non-banking company.
Objective
The RBI mandates various returns from NBFCs concerning deposit acceptance, compliance with prudential norms, Asset Liability Management (ALM), and more, adhering to set timelines as defined in Master Directions. Compliance returns are multifaceted and must be submitted promptly to prevent punitive actions by the RBI. This guide consolidates compliance requirements, providing a clear overview of filing dates and relevant regulations applicable across the NBFC landscape.
Abbreviations
- SAC: Statutory Auditor Certificate
- DNBS: Department of Non-Banking Supervision
- NBFC-ND-SI: Non-Deposit Taking Systemically Important
- NBFC: Non-Banking Financial Company
- HFC: Housing Finance Company
- FAFT: Financial Action Task Force
- NBFC-UL, NBFC-ML, NBFC-BL: Upper Layer, Middle Layer, and Base Layer NBFCs respectively
- NOFHCs: Non-Operative Financial Holding Companies
- LCR: Liquidity Coverage Ratio
- CRILC: Central Repository of Information on Large Credits
- SMA: Special Mention Account
- ALM: Asset Liability Management
- NBFCs-D: NBFCs accepting deposits
- NBFC-CIC: NBFC Core Investment Company
Yearly Filings/Intimations
Here are the annual compliance requirements for NBFCs:
| S.No. | Particulars | Description | Applicability | Filing Dates | Regulating Document |
|---|---|---|---|---|---|
| 1 | DNBS10 | Statutory Auditor Certificate (SAC) for Ongoing Regulatory Compliance | All NBFC and ARC | 31st December | Master Direction– RBI (Filing of Supervisory Returns) Directions, 2024 |
| 2 | DNBS02 | Financial details including assets and liabilities, and compliance norms | Non-Deposit Taking Non-NDSI | 30th May | Master Direction-NBFC Returns |
| 3 | Schedule-I Return | Public deposits, housing loan distribution | HFC | 30th June | Master Circular-Returns HFC |
| 4 | Statutory Auditor Certificate | SAC for housing finance company registration | HFC | 30th June | Master Circular-Returns HFC |
| 5 | FAFT Compliance Certificate | Compliance with RBI norms regarding investments from FATF non-compliant jurisdictions | HFC | 30th June | Master Circular-Returns HFC |
| 6 | Declaration | Board resolution on public deposits acceptance/holding | NBFC – ICC | 30th April | Master Direction-NBFC- Acceptance of Public Deposit Direction, 2016 |
| 7 | Declaration | Board Resolution for Share/Securities Acquisition | Company acquiring own securities | 30th April | Master Direction-NBFC- Acceptance of Public Deposit Direction, 2016 |
| 8 | Form – A Certificate | Regarding appointment of Statutory Central Auditor/Statutory Auditor | All NBFCs | 21st April | Master Direction– RBI (Filing of Supervisory Returns) Directions, 2024 |
Half-Yearly Filings/Intimations
The following are the half-yearly compliance requirements:
| S.No. | Particulars | Description | Applicability | Filing Dates | Regulating Document |
|---|---|---|---|---|---|
| 1 | Statement on Interest Rate Futures | For NBFCs participating in Interest Rate Future Exchanges | NBFCs including HFC | 30th April, 31st October | Master Direction-Scale Based Regulation, Master Circular-Returns HFC |
| 2 | Schedule-IIReturn | Prudential Norms information on Capital Adequacy and more | HFC | 12th May, 12th November | Master Circular-Returns HFC |
| 3 | ALM-II | Statement on Liquidity and Interest Rate Sensitivity | HFC with asset size ≥ Rs. 100 crore | 12th May, 12th November | Master Circular-Returns HFC |
| 4 | FDI-SAC | Compliance with FDI terms and conditions | HFC with Foreign Direct Investment | 30th April, 31st October | Master Circular-Returns HFC |
Quarterly Filings/Intimations
Additional quarterly filings are necessary, including:
| S.No. | Particulars | Description | Applicability | Filing Dates | Regulating Document |
|---|---|---|---|---|---|
| 1 | Annex X | Report on Pledged Securities | NBFC with assets ≥ Rs. 100 crore | Quarterly as of 30th June, September, December, March | Master Direction-Scale Based Regulation |
| 2 | Notification/Email | Communicating Principal, interest, EMI details | All NBFC including HFC | Quarterly as of 30th June, September, December, March | Master Direction– HFC, Master Direction-Scale Based Regulation |
| 3 | Report on Total Exposure | For excess borrower exposures | All NBFC | Quarterly as of 30th June, September, December, March | Master Direction-Scale Based Regulation |
| 4 | Statement | Changes in Directors as per Fit and Proper criteria | NBFC-ML, NBFC-UL, HFC | Quarterly as of the 15th of July, October, January, and April | Master Direction-Scale Based Regulation, Master Direction-HFC |
Monthly Filings/Intimations
Monthly reports are also required:
| S.No. | Particulars | Description | Applicability | Filing Dates | Regulating Document |
|---|---|---|---|---|---|
| 1 | Annex XXV | Reporting of Large Exposure | NBFC-UL | By end of each month | Master Direction-Scale Based Regulation |
| 2 | Annex XIX | Information on borrowers with possessed secured assets | All NBFC including HFC | By end of each month | Master Direction-Scale Based Regulation, Master Direction-HFC |
| 3 | DNBS04B | Structural Liquidity and Interest Rate Sensitivity | NBFC-UL, NBFC-ML with assets ≥ ₹100 crore | Within 15 days from the end of the month | Master Direction– RBI (Filing of Supervisory Returns) Directions, 2024 |
| 4 | DNBS08 | CRILC main return | NBFC-UL, NBFC-ML, NBFC-BL with assets ≥ ₹500 crore | Within 15 days from the end of the month | Master Direction– RBI (Filing of Supervisory Returns) Directions, 2024 |
Conclusion
Compliance with NBFC regulations is paramount for avoiding penalties by the RBI. By comprehensively understanding and adhering to the filing timelines and requirements, NBFCs can effectively manage compliance and ensure their operational continuity within the regulatory framework. Stay updated and ensure adherence to all stipulated norms for smooth functioning in the financial landscape.