Pocket guide for NBFC compliances from FY 2019-2020 onwards

(A) Annual Compliances Checklist to be done by an NBFC (Non-taking Public Deposit)

Asset Size – Below Rs. 100 Crores

Asset Size – Between Rs. 100-500 Crores

Note:

1. DNBS-01 will be filed Quarterly Return on Financial indicators by NBFC accepting or holding deposits within 15 days of the closure of the Quarter.

2. In case of CIC NBFC, Returns of Crif, CIBIL, Equifax, experion to be filed periodically vide circular No. RBI/2014-15/458 DNBR(PD). CC.No. 019/03.10.01/2014-15 dated February 6, 2015.

(B) Key Points:

• Acquisition of Authority of Applicable NBFCs: Prior written approval from the bank is required.
• Open a Branch or Joint Venture or Supplementary or Representative Office or commission Investment Abroad: Prior permission for RBI is necessary.
• Ratings of NBFCs: In case of any amendment in rating same information shall be reported within 15 days of such change.
• Every NBFC should be a member of all four CICs, (CIBIL, EQUIFAX, CRIF & EXPERIAN)
• All NBFC should be a member of CERSAI & FIU-IND.
• The Return to be file by NBFCs before its due date that is within 60 days from the end of the financial year.
• The financial Assets and income from them should be more than 50%.
• The Auditor certificate needs to be uploaded on RBI Official Website (cosmos)”.
• A fair practice code shall be adopted by every applicable NBFC having a customer interface which interalia shall include Loan appraisal and terms/conditions, Disbursement of loans, and General, Responsibility of Board of Directors. “
• Accounting standards – Accounting standards & guidance notes released by ICAI must be convoyed along as far as they are not specious with any of these directions.”
• Investments Accounting – The investment policy for the enterprise shall be defined by the Management of the company and must follow the same,
• Call loans – Management aiming to grant demand or call loans must define policies for the company and shall service the same for every NBFC.
• Categorization of Asset – Categorization of Assets shall be categorized as follows –

1. Standard assets

2. Doubtful assets and

3. Sub-standard assets

4. Loss assets

• Provisioning of standard asset – A prerequisite must be created for standard assets at 0.25 percent of the outstanding assets for each NBFC.”
• Various NBFCs – For the purpose of investigative, the perimeter of five hundred crore-asset size all the NBFCs must be merged.
• Balance sheet – The prerequisite for bad and uncertain debts and reduction in investment must be individually revealed by every NBFC.
• Schedule to the balance sheet – The facts in the schedule as set out in the directions shall be attached to the balance sheet of every NBFC.
• NBFCs own shares guideline – NBFC shall not fund against its own shares.
• Combine loans to the security of shares – NBFC with asset size of Rs 100 crores and above offering loan against the security of listed shares must, maintain a Loan to Value ratio of 50% for loans held against the security of shares. In case of fall it shall be made good within 7 days. Group 1 securities for loan above 5 lakh can be accepted, where loan is done for investment in capital market. Reporting prerequisite to stock exchanges on quarterly basis.”
• Change in address, directors, auditors, etc. to be submitted – In case of any change in the address, auditors or directors, the same shall be communicated by every NBFC within a period of 6 month.