All Services

What are NBFC Annual Compliance Checklist

Khushboo Priya

| Updated: Mar 06, 2019 | Category: Compliance, NBFC

NBFC is one of the most common forms of financial institutions in India which contributes an outstanding percentage of GDP rise to the country’s economy. As important as it is to obtain NBFC license for commencing a Non-Banking Financial Company, it is equally important to follow-up with the NBFC annual compliance checklist.

However, in case, you don’t follow up with the NBFC compliance; you would have to pay hefty penalties. Even it could lead to the company’s closure or cancellation of NBFC license.

Therefore, if you’re operating an NBFC, then make sure that you have the valid NBFC annual compliance checklist. The checklist will help you to file returns on time. Hence, we have brought a complete list of NBFC annual compliance so that you can save yourself from penalties and file returns before the due date.

Definition of NBFC Annual compliance checklist

NBFC annual compliance checklist defines the due date of the NBFC compliances and returns that every NBFC has to file. The list is made as per the guidelines and master directions of RBI.

As per the Non-Banking Financial Company Returns (Reserve Bank) Directions, 2016, every Non-Banking Financial Company needs to comply with the compliances described later in this blog.

Types of NBFCs on the basis of activities and liabilities

Typically, there are three types of NBFCs based on the kind of activities and liabilities they carry on. They are as follows:

  • NBFCs accepting deposits (Deposit-taking NBFCs);
  • Non-deposit taking NBFCs (NBFC-ND);
  • NBFC-ND-Systematically Important (NBFC-ND-SI).

Essential NBFC Compliance Checklist for Non-Deposit & Deposit-taking company

Below we have made an NBFC annual compliance checklist for both Non-Deposit and Deposit-taking company. Have a look below:

S. No Particulars Time Limit
  Annual Compliances   
1. Unaudited March Monthly return/NBS-7 On or before 30th June
2. Statutory Auditors certificate on Income & Assets On or before 30th June
3. Information about Companies having FDI/Foreign Funds On or before 30th June
4. Audited March Monthly return/NBS-7 Upon completion
5. File audited annual balance sheet and P&L Account One month from the date of signoff
6. Resolution of Non-Acceptance of Public Deposit Before the commencement of the new Financial year
7. Declaration of Auditors to Act as Auditors of the Company Annual basis
  Monthly Compliance  
8. Monthly return By 7th of every month
  Periodical Compliances  
9. Appointment of Director Within 30 days of appointment
10. Resignation of Director (DIR-12 + Challan report) Within 30 days of appointment
11. Adoption of any notification in the ensuing Board Meeting and filing the certified copy with RBI  
NBFC Business Plan

Returns and Compliances of NBFCs registered with RBI

With reference to Master Direction – NBFC-NDs-SI and NBFC-SI deposit-taking company must file the following returns as described below:

1. Deposit-taking NBFCs are required to submit the following returns:

  • NBS-1 return: Every NBFC that accepts or holds public deposits should submit NBS-1 return on a quarterly basis. The purpose of filing this return is to capture financial details such as Profit and Loss account, Components of Assets and Liabilities, Exposure to sensitive sectors, etc.
  • NBS-2: NBFC which accepts public deposits are required to submit a quarterly return on Prudential Norms. The intent behind filing this return is to capture compliances related to several prudential norms such as Asset Classification, Capital Adequacy, NOF, Provisioning, etc.
  • NBS-3: Again, it’s a quarterly return that every deposit-taking NBFC needs to file on a quarterly basis. Besides, the objective behind introducing this return is to capture information about Statutory Investments in the Liquid States. Moreover, the statutory investments include Fixed Deposits in Schedules Commercial Bank, Central or State Government Securities, etc.
  • NBS-4: It’s a kind of annual return of critical parameters. The return must be filed by a rejected company holding public deposits. Earlier, NBS-5 was filed. However, now NBS-5 stands withdrawn as NBS-1 is filed quarterly. The objective of filing NBS-4 is to find the repayment status of the rejected NBFCs accepting public deposits.
  • NBS-6: It’s a monthly return on exposure to capital market by NBFC taking deposits with total assets equal to or more than Rs. 100 crores.
  • Half-yearly ALM returns by NBFC accepting public deposits of more than Rs. 20 crores or asset size of above Rs.100 crores.
  • Audited Balance sheet and Auditor’s Report by Non-Banking Financial Companies accepting public deposits.
  • Branch Information Return: It’s a quarterly return that every NBFC which accepts or holds public deposits needs to submit.

2. NBFCs-ND-SI is required to submit the following returns:

  • NBS-7: It’s a quarterly statement of capital funds, risk asset ratio, risk-weighted assets, etc., for NBFC-ND-SI. Therefore, you need to file it on a quarterly basis.
  • Monthly returns on Necessary Financial Parameters of NBFCs-ND-SI must be submitted on a monthly basis.
  • ALM returns: ALM (Asset-Liability Management) Returns refer to multiple returns that are supposed to be submitted by NBFCs-ND-SI at several intervals as described below:
    • Statement of short term dynamic liquidity ALM [NBS-ALM1] -Quarterly;
    • Structural liquidity in format ALM [NBS-ALM2] statement – Half Yearly;
    • Interest Rate Sensitivity in format ALM – [NBS-ALM3] statement- Half Yearly;
    • Assets Liability Mismatch [ALM-YRLY] statement – Annually.
  • Branch Information Return: Every NBFCs-ND-SI must submit the branch information return on a quarterly basis.

3. Quarterly return on important financial parameters of non-deposit taking NBFCs holding assets of above Rs. 50crores and higher but below Rs. 100 crores.

Non-deposit taking NBFCs with asset size between Rs. 50 crores and Rs. 100 crores are required to submit the basic details such as the name of the company, address, NOF, and profit/loss during the last three years quarterly.

Take away

Therefore, any company willing to carry on the business of non-banking financial institution are imperatively required to obtain an NBFC registration with RBI. Moreover, according to Section 45-IA of the RBI Act, 1934, the applicant must have a net owned fund of Rs. 2 crores and it must obtain a certificate of registration from the bank.

In addition, if you have obtained the license, you are strictly required to follow the compliances of NBFC as described above. Furthermore, the consequences of non-compliance will lead to a hefty penalty and even shutting down the company.
  • 45
  • 298
  • 26
  • 9
Khushboo Priya

Khushboo Priya is an experienced Legal content writer with a prodigious proof-reading and research & development skill.

Top Rated CA

Related Articles

Category: NBFC, RBI Advisory | Date: Oct 16, 2019

How to Appeal Against NBFC License Cancellation?

NBFCs (Non-Banking Financial Companies) are the type of companies which provide banking services like loans and advances, acquisition of stocks/bonds/shares/securities/debentures. They are incorporated as per Companies Act 2013 and regulated...

Category: NBFC | Date: Nov 27, 2017

How Prosper and Beneficial to Have NBFC Business in India

Earlier the NBFC lending or obtaining assistance for any business person was a cumbersome procedure because of the reasons like: High sky interest rates;Number of requirements of collateral securities while...

Click To Go Up Hi! My name is Akanksha! Let's talk.