Registrations with different Entities by Non-Deposit Taking NBFC
NBFC is required to register with various entities as per relevant Master Direction, Circular and notification issued by RBI from time to time. Brief up for the same is as below. This article is limited to the extent registrations required by Non-Deposit Taking NBFC. (NBFC-ND-NSI)
Credit Information Companies are also known as Credit Bureaus in India. They were licensed to work in the country under the Credit Information Companies (Regulation) Act, 2005 by the Reserve Bank of India (RBI). There are four well-recognized credit information companies in India as of date as below.
Based on the data of the individuals, a Credit Information Company prepares a Credit Information Report and a Credit Score. Based on the data of the companies, a Credit Information Company prepares a Company Credit Report (CCR).
Relevant para no. 54 and 86 of Master Direction of NBFC-ND-NSI (Non Deposit Taking, Non Systematically Important), reproduced as below.
54. Ensuring compliance with conditionalities
Every NBFC-MFI has to be a member of all Credit Information Companies (CICs) established under the CIC Regulation Act 2005, provide timely and accurate data to the CICs and use the data available with them to ensure compliance with the conditions regarding membership of SHG/ JLG, level of indebtedness and sources of borrowing. While the quality and coverage of data with CICs will take some time to become robust, the NBFC-MFIs may rely on self-certification from the borrowers and their own local enquiries on these aspects as well as the annual household income.
86. Submission of data to Credit Information Companies (CICs) – Format of data to be submitted by Credit Institutions
(1) All applicable NBFCs (other than those which are purely into investment activities without any customer interface) shall become member of all CICs and submit data (including historical data) to them.
(2) In terms of sub-sections (1) and (2) of section 17 of the Credit Information Companies (Regulation) Act, 2005, a credit information company may require its members to furnish credit information as it may deem necessary in accordance with the provisions of the Credit Information Companies (Regulation) Act, 2005 and every such credit institution has to provide the required information to that credit information company. In terms of Regulation 10(a) (ii) of the Credit Information Companies Regulations, 2006, every credit institution shall:
(a) keep the credit information maintained by it, updated regularly on a monthly basis or at such shorter intervals as mutually agreed upon between the credit institution and the credit information company; and
(b) take all such steps which may be necessary to ensure that the credit information furnished by it, is update, accurate and complete.
Now known as TransUnion CIBIL Limited, CIBIL previously known as Credit Information Bureau (India) Limited, came into existence in August, 2000 in the financial capital of India, Mumbai
In 2011, they made their CIBIL Score available to individual consumers too. Now working in conjunction with TransUnion International (a worldwide credit bureau) and Dun and Bradstreet (an international provider of credit information), CIBIL has credit records of more than 550 million individuals and businesses.
NBFC can avail membership of CIBIL as per Process and instruction detailed in this webpage. https://www.transunioncibil.com/become-a-member/membership-eligibility-process
Equifax founded in 1899, Atlanta, USA as Retail Credit Company is a Credit Information Company which is one of the oldest in the world. Equifax listed its services in India, significantly later than CIBIL, in the year 2010 under the name Equifax Credit Information Services Private Limited (ECIS). NBFC can avail membership as per Process and instruction detailed in the webpage http://www.equifax.co.in/process-note/en_in .
Officially known as Experian Credit Information Co,. Experian commenced its Indian operations in the year 2006.NBFC can avail membership as per Process and instruction detailed in the webpage https://www.experian.in/.
CRIF High Mark was formerly known as High Mark. It was established in 2007 in India. It received its certificate of registration to operate as a Credit Bureau in the year 2010. Then, in the year 2014, CRIF took over High Mark. NBFC can avail membership of CRIF High Mark by following the steps detailed in this webpage https://www.crifhighmark.com/
CERSAI is a Government of India company, licensed under section 8 of the Companies Act, 2013.
The company has been incorporated with majority shareholding of the Central Government, Public Sector Banks and National Housing Bank initially for the purpose of operating a Registration System under the provisions of Chapter IV of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). Later, CERSAI was entrusted upon the responsibility of operating and maintaining a KYC Registry, governed under PML Rules 2005 (Maintenance of Records).
The Security Interest Registry, which was incorporated in 2011, made a humble beginning by filing of Security Interest of Immovable Properties, it has today matured into a complete registry encompassing security interest of immovable, movable, intangible properties and assignment of receivables. It now provides access to all kind of creditors and also provides facility for filing of attachment orders and court orders, so as to provide a complete picture of any encumbered / attached property. The importance of Security Interest Registry and its contribution In Ease of Doing Business (EoDB) score of the country under the sub-head Getting Credit has been significant.
After getting CKYC number, Entity is required to register on https://www.cersai. org.in/CERSA I/entityregn.prg
Financial Intelligence registration is required for every NBFCs post incorporation and has to report their client details as per the prescribed requirement under the Prevention of Money Laundering Act. FIU-IND registration provides quality financial intelligence for safeguarding the financial system from terrorism-financing and other offenses including money laundering.
The main objective of FIU-IND is to receive suspicious transaction reports and disseminate valuable financial information by collecting and analysing the information. It acts as a Central Repository and maintains the national data on cash and suspicious transaction on the basis of the reports received from the entities who are reporting.
Organisations has to do entity registration and Principal Officer Registration on https://finnet.gov.in/.
Para no. 5.11 for Reporting of Transactions to FIU are reproduced as below.
5.11 Reporting of transactions to FIU or other competent authorities
NBFCs would be responsible for making Currency Transactions Reports and Suspicious Transactions Reports to FIU or any other competent authority in respect of the NBFCs’ customer related activities carried out by the service providers.
Central KYC registration is one of the most important NBFC compliances to be done by the NBFCs and rapidly getting adopted by the companies in India. CKYC is termed as a centralized repository which collects the records for the customers in financial services. CERSAI (Central Registry of Securitization and Asset Reconstruction and Security Interest in India) is the registry for the Central KYC.
All the entities required to be registered and regulated from Reserve Bank of India i.e., NBFCs are required to take registration of Central KYC to reduce the burden of the entity by producing and assembling the documents of the consumers creating a new relationship with the financial entity.
National E-Governance Securities Limited (NeSL) is India’s first and only IU and is registered with the Insolvency and Bankruptcy Board of India (‘IBBI’) under the aegis of the Insolvency and Bankruptcy Code, 2016 (‘IBC, 2016’). NeSL has been set up by leading banks and public institutions and is incorporated as a union government company.
The primary role of NeSL is to serve as a repository of legal evidence holding the information pertaining to any debt/claim, as submitted by the financial or operational creditors and verified and authenticated by the other parties to the debt.
Further, according to the RBI Circular DBR.No. Leg.BC.98/09.08.019/2017-18 dated December 19, 2017 on Submission of Financial Information to Information Utilities
“3. All financial creditors regulated by RBI are advised to adhere to the relevant provisions of IBC, 2016 and IBBI (IUs) Regulations, 2017 and immediately put in place appropriate systems and procedures to ensure compliance to the provisions of the Code and Regulations.”
All financial creditors regulated by RBI, such as NBFCs, are required to submit the financial information to the IU.
The Reserve Bank of India has set up a Central Repository of Information on Large Credits (CRILC) to collect, store, and disseminate credit data to lenders as advised by the Bank in its Circular No. DBS. No. COSMOS.9862/33.01.018/2013-14 dated February 13, 2014 issued by the Department of Banking Supervision.
All NBFCs, (Notified NBFCs) shall be required to report the relevant credit information on a quarterly basis in the prescribed formats given in Annex I to CRILC once the XBRL reporting mechanism is established. Till then they shall forward the information to PCGM, Department of Banking Supervision, Reserve Bank of India, World Trade Centre, Mumbai – 400 005 in hard copy.
The data includes credit information on all the borrowers having aggregate fund-based and non-fund-based exposure of ₹ 50 million and above with them and the SMA status of the borrower. The Notified NBFCs shall be ready with the correct PAN details of their borrowers having fund based and / or non-fund-based exposure of ₹ 50 million and above duly authenticated from Income Tax records.
NBFCs are required to have registration with all captioned entities.
Disclaimer: This is to inform to readers that the views, thoughts, and opinions expressed in the article belongs solely to the author. It needs to be reviewed on case-to-case basis.
About Author: CA Swati Panchal (FCA, M. Com, DISA)
The Author is a young practicing FCA based out at Ahmedabad, Gujarat, India, specialising in NBFC matters. She is also DISA, FAFP and FXTM. She is also eligible to be an Independent Director. She possesses an experience in the field of Auditing, Accounting and handling Taxation Matters along with the specialized functions including Finance, Banking and other Legal matters. She is well versed in the area of Corporate/Bank Audits, particularly Statutory Audits, Tax Audits, Internal Audits, System Audit, Revenue Audit, company law matters and NBFCs Matters. She can be reached on +918879051225 or [email protected]/ [email protected] tes.com.