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Non-Banking Financial Company

A Non-Banking Financial Company, or NBFC, is a legal organization formed under the Companies Acts of 1956 and 2013. These firms have played an essential role in India’s financial system by introducing variety and productivity into the financial industry. NBFC’s have developed throughout the years, including operations, asset quality, heterogeneity, profit, and regulatory architecture. This article discusses the Annual Compliance of Non-Banking Financial Company (NBFC) with RBI, Different types of returns filed by NBFC with RBI.

Guidelines for an NBFC

• They will be unable to accept deposits that are due on demand.
• The public deposits that the firm can accept must be for a minimum of 12 months and a maximum of 60 months.
• The Institution’s interest rate cannot exceed the cap set by the Reserve Bank of India from time to time.
• The Reserve Bank of India would not assure the return of any money thus borrowed by the company.
• All details regarding the firm and any changes in its structure must be provided to the Reserve Bank of India.
• Deposits made by the general public will be unprotected.
• Annually, the Institution is required to produce an audited balance sheet.
• Each year, a mandatory return on the Institution’s deposits in the form NBS – 1 must be provided.
• A quarterly return on the Institution’s liquid assets must be provided.
• A certificate from the auditors confirms that the company can repay all deposits or money received from the public as required.
• A half-yearly Asset Liability Management (ALM) return must be submitted by any firm with a public deposit of Rs. 20 crore or more, or assets of Rs. 100 crore or more.
• Every six months, the credit rating must be obtained and presented to the RBI.
• The company must keep a minimum of 15% of its public deposits in liquid assets.

 

Compliance Calendar for NBFC Companies

Return to be submitted by non-Deposit taking NBFC

NBFC is having an assets size below Rs. 100 Cr (NBFC-ND)

Name of Return	Periodicity	Time Period	Details
1. Branch Info Return	Quarterly	15 days	Branch Details. NBFC having assets size of Rs. 50 cr and above.
2. Overseas Investment Return	Quarterly	15 days	Return to be submitted by NBFCs having overseas investment.
3. Return on FDI	Half Yearly	30 days	To capture compliance with the stipulated minimum capitalization norms
4. NBS-9	Annually	60 days	Annual Return
5. SAC	Annually	One month	Statutory Auditor Certificate within one month from the date of finalization of Balance Sheet. Not later than 31st December.

 

NBFC’s having assets size Rs. 100 – 500 Cr (NBFC-ND)

Name of Return	Periodicity	Time Period	Details
1. Return on Important Financial Parameters	Monthly	Seven days	Sources and Application of Funds, Profit and Loss Account, Asset Classification, etc.
2. ALM-1	Quarterly	15 days	Statement        of                          Short                          Term                          Dynamic Liquidity
3. Branch Info Return	Quarterly	15 days	Branch Details
4. Overseas Investment Return	Quarterly	15 days	Return to be submitted by NBFCs having overseas investment.
5. Return on FDI	Half Yearly	30 days	To capture compliance with the stipulated minimum capitalization norms
6. ALM-2	Half Yearly	30 days	Statement of Structural Liquidity
7. ALM-3	Half Yearly	30 days	Interest Rate Sensitivity
8. ALM Yearly	Annually	15 days	Disclosure in Balance Sheet. CRAR, Exp to Real Estate,
9. NBS-8	Annually	60 days	Annual Return
10. SAC	Annually	One month	Statutory Auditor Certificate within one month from the date of finalization of Balance Sheet. Not later than 31st December.

 

 

NBFC having assets size Rs. 500 Cr and above (NBFC-ND-SI)

Name of Return	Periodicity	Time Period	Details
1. Return on Important Financial Parameters	Monthly	Seven days	Sources and Application of Funds, Profit and Loss Account, Asset Classification, etc.
2. ALM-1	Quarterly	15 days	Statement        of     Short      Term      Dynamic Liquidity
3. Branch Info Return	Quarterly	15 days	Branch Details
4. NBS-7	Quarterly	15 days	Quarterly Return of Capital Funds, Risk- Asset Ratio (Supervisory Return)
5. Overseas Investment Return	Quarterly	15 days	Return to be submitted by NBFCs having overseas investment.
6. CRITIC	Quarterly	21 days	Reporting        to     Central       Repository        of Information on Large Credits
7. Return on FDI	Half Yearly	30 days	To capture compliance with the stipulated minimum capitalization norms
8. ALM-2	Half Yearly	30 days	Statement of Structural Liquidity
9. ALM-3	Half Yearly	30 days	Interest Rate Sensitivity
10. ALM Yearly	Annually	15 days	Disclosure in Balance Sheet. CRAR, Exp to Real Estate,
11. NBS-8	Annually	60 days	Annual Return
12. SAC	Annually	One month	Statutory Auditor Certificate within one month from the date of finalization of Balance Sheet. Not later than 31st December.
13. SMA-2 Return	Weekly	On Every Friday	Reporting of Special Mention Account status

 

As at the end of March every year, all NBFCs are required to submit:

 

• All NBFCs are obliged to produce an annual certificate validly attested by the Statutory Auditors that the firm is involved in the business of NBFI, obliging it to retain the CoR by the end of March each year.
• The certificate must also include the NBFC’s asset/income pattern to be classified as an AFC, Investment Company, or Loan Company.
• Financial statements that have been audited, as well as the Directors Report
• Non-deposit taking NBFC Board Resolution of Non-Acceptance of Public Deposit. An annual return on Foreign Liabilities and Assets (FLA) by 15th July each year.

 

Annual Compliance of NBFC’S

The NBFC’s Annual Compliance are as follows:

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
Resolution of Non-acceptance of Public Deposit	Before the start of the new Financial year
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

 

Monthly Compliance

PARTICULARS	TIME LIMIT
Monthly Return	It must be done on the 7th of every month

 

Periodical Compliances

PARTICULARS	TIME LIMIT
Director’s Appointment	Within 30 days of the 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

 

What is NBFC Annual Compliance Checklist

The NBFC yearly compliance checklist specifies the due dates for the NBFC compliances and returns that each NBFC is required to file. The list is compiled in accordance with the RBI’s rules and master directives.

Every Non-Banking Financial Company must comply with the compliances specified further in this blog, according to the Non-Banking Financial Company Returns (Reserve Bank) Directions, 2016.

 

Different types of returns filed by NBFC with RBI

The lists of returns to be submitted by the above NBFCs are as under:

S.no	Form/Return	Particular/ Purpose of Return or document	Applicability	Due date
1.	NBS-1 Return	Deposit-taking NBFCs should use Return on Financial Indicators to record financial information such as asset and liability components, profit and loss account, exposure to sensitive industries, and so forth.	All NBFCs that accept/hold public deposits	Within 15 days of the quarter’s end
2.	NBS-2 Return	Deposit-taking NBFCs’ Return on Prudential Requirements to capture compliance with different prudential norms, such as Capital Adequacy, Asset Classification, Provisioning, NOF, and so on.	All NBFCs that accept/hold public deposits	Within 15 days of the quarter’s end
3.	NBS-3 Return	Deposit-taking NBFCs’ Return on Liquid Assets to collect information of Statutory Investments in Liquid Assets (Central/State Government Securities, Fixed Deposits in Scheduled Commercial Banks, and so on).	All NBFCs that accept/hold public deposits	Within 15 days of the quarter’s end
4.	NBS-4 Return	Return on the status of public deposits held by NBFCs whose CoR has been denied by the Bank in order to determine the repayment status of public deposits held by denied NBFCs- D this return is being requested.	All NBFCs that accept/hold public deposits	Within 30 days of the year’s end
5.	NBS-7	Return on Prudential Norms measures compliance with different prudential standards, such as capital adequacy, asset classification, provisioning, NOF, and so on.	All NBFCs-ND-SI	Within 15 days of the quarter’s end
6.	NBS-8 Return	Return on Prudential Norms measures compliance with different prudential standards, such as capital adequacy, asset classification, provisioning, NOF, and so on.	NBFCs (non-deposit taking) having assets ranging from Rs 100 crore to Rs 500 crore.	Within 60 days after the end of the year, i.e. on May 30th.
7.	NBS-9 Return	Return on Financial Indicators by NBFCs with assets under 100 crores to collect profile information and financial data, such as asset and liability aspects, profit and loss account, branch information, and so forth.	NBFCs (non-deposit taking) having assets of less than Rs 100 crore	Within 60 days from the end of the year, i.e., 30th May.
8.	Asset-Liability Management (ALM) Return (NBFC-D)	To address issues about asset-liability mismatches and interest rate risk exposures, deposit-taking NBFCs implemented an ALM System as part of their overall risk management system.	According to their most recent audited balance sheet, all NBFCs accept/hold public deposits with an asset basis of 100 crores or more, or hold public deposits with an asset base of 20 crores or more (regardless of asset size).	Within 30 days of the half-conclusion. year’s
9.	NDSI_ 500cr return	Return on Important Financial Parameters to capture financial data, such as asset and liability components, profit and loss account, exposure to sensitive sectors, sectoral credit deployment, and so on.	All NBFCs-ND-SI	Within 15 days of the conclusion of the quarter
10.	Asset-Liability Management (ALM) Returns	To address concerns about asset-liability mismatches and interest rate risk, the NBFC-ND-SI implemented an ALM Strategy as part of its comprehensive risk management system.   NBFCs-ND-SI are required to file several returns at different intervals, as shown below:	All NBFCs-ND-SI
	a. Statement of short-term dynamic liquidity [NBS-ALM1] (Quarterly).			Within 15 days of the quarter’s end
	b. Statement of structural liquidity [NBS-ALM2] (Half yearly).			Within 30 days from the end of Half-year.
	c. Statement of Interest Rate Sensitivity [NBS-ALM3] (Half yearly).
	d. Statement on Assets Liability Mismatch [ALM-YRLY]. (Yearly)			Within 15 days of the quarter’s end
11.	Branch Information Return	To assess the scope and geographic distribution of NBFCs	NBFCs-ND-SI and NBFCs accepting /holding public deposits	Within 15 days of the quarter’s end
12.	Certificate on compliance with FDI norms:	To capture compliance with the specified minimum capitalization standards, and its operations are limited to those authorised by FEMA.	NBFCs have Foreign Direct Investment.	Within 30 days from the end of the Half-year
13.	Overseas Investment Return	To collect information on NBFCs’ international investments.	NBFCs (both deposit-taking and non-deposit-taking) having overseas investments.	Within 15 days of the quarter’s end
		In addition to the foregoing, NBFCs must prepare the annual certificate from statutory auditors to the Bank’s concerned Regional Office, certifying that they have cooperated fully with all of the conditions outlined in the Master Direction – Non-Banking Financial Company – Systemically Important Non-Deposit Taking and Deposit Taking Company (Reserve Bank) Direction 2016.
14.	ARC Return	To record financial metrics as well as different operational information, such as assets (NPA) bought, acquisition cost, recovery status, and so on.	Asset Reconstruction Companies	Within 15 days of the quarter’s end
15.	NBS-1A	RNBCs use Return on Financial Indicators to record financial data such as asset and liability components, profit and loss account, exposure to sensitive industries, statutory investments in liquid assets, and so on.	Residuary Non-Banking Companies (RNBCs)	Within six months from the end of the year, i.e., 30th September.
16.	NBS-3A			Within 15 days of the quarter’s end
17.	CRITIC	Return on Early Stress Recognition on Large Accounts to Facilitate Early Recognition of Financial Distress, Prompt Resolution Steps, and Fair Recovery for Lenders.	All NBFCs-ND-SI, NBFCs-D, and NBFC-Factors	Within 21 days from the end of the quarter.
18.	SMA-2 Return			On every Friday of the week when the relevant account first came in the SMA-2 category.
19.	Statement on Interest Rate Futures transaction	To know the extent of participation of NBFCs in the Interest rate Future market.	NBFCs participating in IRF exchanges for hedging their underlying exposures	Within a period of a month from the end of Half Year.
Returns/intimations applicable to every NBFC
20.	Annual Report to RBI	Submission to the Reserve Bank of India of an audited balance sheet, an audited profit and loss account as of the final day of each fiscal year as passed by the company in general meeting, and a record of the report of the Board of Directors placed before the company at such meeting.	Every miscellaneous non-banking company	within fifteen days of the Annual General  meeting
21.	Statutory Auditors Certificate (SAC):	Annual Certificate from Statutory Auditors stating that it is involved in non-banking financial institution activities necessitating the holding of a Certificate of Registration given under Section 45-IA of the RBI Act to guarantee continuing regulatory compliance.	Every NBFC	One month from the date of finalization of the Balance Sheet. Not later than 31st December
22.	Annual return	Every non-banking firm [keeping or receiving deposits] must submit an annual return to the Reserve Bank with the information provided in the approved format.	Every NBFC
23.	Intimation for changes in Directors/principal officers	Within one month of the start of operation, every non-banking firm should provide to the Reserve Bank a written statement comprising a list of:-	Every NBFC	Within a month of the event’s occurrence
24.	a.     the names and the official designations of its principal officers;		Every NBFC	Within one month after the event’s occurrence
25.	b.    the names and residential addresses of the directors of the company; and		Every NBFC
26.	c.     the specimen signature of the officers authorized to sign on behalf of the company returns specified in paragraph (1).		Every NBFC
27.	Any modification in the list referred to in clauses a to c above must be communicated to the Reserve Bank within one month of its occurrence.		Every NBFC

 

Details of returns to be submitted by NBFC-ND-SI:-

Sr. No	Name of the Return	Periodicity	Reference Date	Reporting Time	Due on
1	NBS7	Quarterly	31st March/ 30th June/ 30th September/ 31st December.	15 days	15th April/ 15th July/ 15th October/ 15th January.
2	NBFCs-ND-SI 500cr	Quarterly	31st March/ 30th June/ 30th September/ 31st December.	15 days	15th April/ 15th July/ 15th October/ 15th January.
3	ALM-1	Quarterly	31st March/ 30th June/ 30th September/ 31st December.	15 days	15th April/ 15th July/ 15th October/ 15th January.
4	ALM-2 & 3	Half-yearly	31st March/ 30th September.	30 days	30th April/ 30th October.
5	ALM-(NBFC-ND-SI)	Annual	31st March	15 days	15th April
6	Branch Info return	Quarterly	31st March/ 30th June/ 30th September/ 31st December.	15 days	15th April/ 15th July/ 15th October/ 15th January.
7	Reporting to Central Repository of Information on Large Credits (CRILC)	Quarterly	31st March/ 30th June/ 30th September/ 31st December.	21 days	21st April/ 21st July/ 21st October/ 21st January
8	Reporting of Special Mention Account status (SMA-2 return)	Weekly	On Every Friday
9	Statutory Auditor Certificate	Annual	31st March	One month from the date of finalization of the Balance Sheet. Not later than 31st December.

 

FAQ’S

How do I know if my company is an NBFC?

The firm will be classified as an NBFC if its financial assets exceed 50% of its total assets (net of intangible assets) and its revenue from financial assets exceeds 50% of its gross income.

Do NBFC’S have to maintain CRR and SLR?

Non-bank lenders would no longer be bound to cash reserve ratio (CRR) and statutory liquidity ratio (SLR) requirements, which would have required them to hold aside a large percentage of their liquidity rather than just lending.

Is a moratorium applicable to NBFC?

The Reserve Bank of India (RBI) enabled banks and non-banking financial firms (NBFCs) to restructure personal loans on Thursday, including providing the borrower a moratorium.

Can we withdraw money from the NBFC?

Money from an NBFC cannot be withdrawn without prior notification. Banks, on the other hand, can accept demand deposits and enable them to be withdrawn. They are also able to issue safely drafted checks.

Can an NBFC borrow from the RBI?

On Thursday, the Reserve Bank of India (RBI) authorizes banks to co-lend with all licensed non-banking finance firms (NBFCs), including housing finance businesses, to boost the flow of credit to unserved and underserved sections of the economy. Annual Compliance of Non-Banking Financial Company (NBFC) with RBI, Different types of returns filed by NBFC with RBI.