{"id":8022,"date":"2019-12-28T08:30:57","date_gmt":"2019-12-28T03:00:57","guid":{"rendered":"https:\/\/swaritadvisors.com\/learning\/?p=8022"},"modified":"2021-04-02T15:16:48","modified_gmt":"2021-04-02T09:46:48","slug":"nbfc-supervision-to-cover-auditors-rbi-measures-to-strengthen-financial-sector","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/learning\/nbfc-supervision-to-cover-auditors-rbi-measures-to-strengthen-financial-sector\/","title":{"rendered":"NBFC Supervision to Cover Auditors- RBI measures to strengthen Financial Sector"},"content":{"rendered":"\n<p class=\"has-drop-cap\">The Reserve Bank of India (RBI) persistently examines the financial sector and takes necessary actions to stabilize the system. Henceforth, RBI has recently extended NBFC Supervision to Cover Auditors, banks, and rating companies. The reason to undertake such a decision was to prevent any defaulter cases in succeeding years and also to enlarge financial stability.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a34f63fd1653\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a34f63fd1653\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/learning\/nbfc-supervision-to-cover-auditors-rbi-measures-to-strengthen-financial-sector\/#A_Synopsis_of_the_whole_story\" title=\"\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nA Synopsis of the whole story &nbsp;\n\n\n\n\">\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nA Synopsis of the whole story &nbsp;\n\n\n\n<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/learning\/nbfc-supervision-to-cover-auditors-rbi-measures-to-strengthen-financial-sector\/#RBI_promotes_a_holistic_approach_for_adequate_NBFC_Supervision\" title=\"RBI promotes a holistic approach for adequate NBFC Supervision&nbsp;\">RBI promotes a holistic approach for adequate NBFC Supervision&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/learning\/nbfc-supervision-to-cover-auditors-rbi-measures-to-strengthen-financial-sector\/#Final_Impact_of_RBIs_Amendments_on_NBFC\" title=\"Final Impact of RBI\u2019s Amendments on NBFC\">Final Impact of RBI\u2019s Amendments on NBFC<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"A_Synopsis_of_the_whole_story\"><\/span>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nA Synopsis of the whole story &nbsp;\n\n\n\n<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>Here are the highlights of the RBI\u2019s outlook on the new guidelines:<\/em><\/strong><\/p>\n\n\n\n<ul><li> RBI says that \u201capart from reinforcing the existing four pillars of supervision encompassing market intelligence, on-site examination, off-site surveillance, and statutory auditor, a fifth pillar will further come in the forefront.\u201d <\/li><li> Furthermore, RBI defines the fifth pillar as the periodic interaction with stakeholders like credit rating agencies, statutory auditors, and banks that have massive exposure to NBFCs. So it shall get institutionalized as part of the supervisory process to monitor emerging build-up risks and <strong>take pre-emptive actions<\/strong> there and then.<\/li><li> The primary motive behind raising <strong>NBFC supervision<\/strong><a href=\"https:\/\/www.rbi.org.in\/Scripts\/NBFCCitiChart.aspx\" class=\"text-primary\"><strong>[1]<\/strong><\/a> <em> is to strengthen the role of NBFCs<\/em>, rating companies and auditors. Also, it will ensure that no defaulters carry any illicit activities and such financial institution functions smoothly. <\/li><li>Reportedly, there are <strong>276 deposit-taking NBFCs<\/strong> with asset size of about more than Rs 500 crore which faces greater on-site and off-site monitoring. Besides, together they are accountable for 85% of the sector\u2019s assets.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"RBI_promotes_a_holistic_approach_for_adequate_NBFC_Supervision\"><\/span>RBI promotes a holistic approach for adequate NBFC Supervision&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Considering the growing complexities and interconnection of banks along with the NBFCs, <em>RBI has initiated some actions to revamp units for efficient supervision. <\/em>So let\u2019s have a look at RBI\u2019s strategy:<\/p>\n\n\n\n<ul><li>Previously, RBI proposes to integrate certain functions of supervisory departments to perceive the systemic linkage between NBFCs and banks and their interconnections. <\/li><li>Thus, it enables a holistic understanding of linkages, systemic risks, and contagion across financial entities.<\/li><li>Further, RBI decides to bring all Government-owned, non-deposit taking NBFCs under off-site surveillance and the regulator\u2019s on-site inspection framework.<\/li><li>Consequently, it cancelled the registrations of 1,604 non-banks for non-fulfilment of the prescribed criterion of the minimum NOF requirement of Rs 2 crore to eliminate non-compliant or weak NBFCs.<\/li><\/ul>\n\n\n\n<figure class=\"wp-block-embed-twitter wp-block-embed is-type-rich is-provider-twitter\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\"><p lang=\"en\" dir=\"ltr\"><a href=\"https:\/\/twitter.com\/hashtag\/NBFC?src=hash&amp;ref_src=twsrc%5Etfw\">#NBFC<\/a> supervision to cover auditors, banks, rating cos<a href=\"https:\/\/t.co\/hjaVqj1epN\">https:\/\/t.co\/hjaVqj1epN<\/a><\/p>&mdash; OakBridge Publishing (@OakbridgePub) <a href=\"https:\/\/twitter.com\/OakbridgePub\/status\/1210040000005324801?ref_src=twsrc%5Etfw\">December 26, 2019<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Final_Impact_of_RBIs_Amendments_on_NBFC\"><\/span>Final Impact of RBI\u2019s Amendments on NBFC<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The Finance Bill 2019 indicates the amendments in the RBI Act, 1934, which confers the powers on the RBI to support governance of NBFCs. Hence, \u201cRBI\u2019s measures will reshape the investors\u2019 apprehensions along with underpinning the aiding NBFCs to perform better. Moreover, the RBI will continue to maintain a consistent vigil over <a href=\"https:\/\/swaritadvisors.com\/nbfc-registration\" class=\"text-primary\"><strong>NBFC License<\/strong><\/a> functions &amp; thereby take necessary steps to secure the overall financial realm of India.<\/p>\n\n\n\n<div class=\"read\"><p><b>Also, Read:<\/b> <mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/learning\/latest-updates-by-rbi-chief-shaktikanta-das-amid-covid-19-to-boost-economy\/\">RBI Chief Shaktikanta Das amid COVID-19 to boost economy<\/a><\/mark>.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>The Reserve Bank of India (RBI) persistently examines the financial sector and takes necessary actions to stabilize the system. Henceforth, RBI has recently extended NBFC Supervision to Cover Auditors, banks, and rating companies. The reason to undertake such a decision was to prevent any defaulter cases in succeeding years and also to enlarge financial stability. [&hellip;]<\/p>\n","protected":false},"author":10,"featured_media":8041,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[89],"tags":[1016],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/8022"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/comments?post=8022"}],"version-history":[{"count":25,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/8022\/revisions"}],"predecessor-version":[{"id":18445,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/8022\/revisions\/18445"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media\/8041"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media?parent=8022"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/categories?post=8022"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/tags?post=8022"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}