Disclosures in Financial Statements For NBFC


Non-Banking Financial Companies (NBFC) are regulated financial institutions that carry out financial intermediation services and offer banking services without holding a full banking license. In India, NBFCs are subject to regulation by the Reserve Bank of India (RBI), and they must adhere to a number of disclosure regulations, including those requiring them to make specific disclosure in their balance sheets. These financial statements, particularly the balance sheet, must accurately and fairly depict the NBFC’s financial situation. Let us discuss the mandatory disclosure in the balance sheet by NBFCs.

Non-Banking Financial Companies

NBFCs are involved in a wide range of financial operations, including lending, investing in securities, financing assets, credit facilities, insurance-related activities, acquisition of shares and stocks, and offering a range of financial services. 

The Reserve Bank of India oversees NBFC in India. To protect the interest of depositors and promote financial stability, the regulatory framework makes sure that NBFC adheres to specific prudential criteria, capital adequacy requirements, governance standards, and transparency norms.

NBFCs offer services that are similar to those offered by traditional banks, yet, they are unable to accept demand deposits, issue checks or drafts, or provide savings and current accounts like banks. However, they can take time deposits, offer credit and loans, and engage in other financial activities.


Disclosures in financial statements are crucial to the financial reporting process 1 because they describe the events that occurred during the financial period and the performance of the company. Users of financial statements need corporate disclosures to understand the company’s liquidity, financial condition, and performance. Financial statement information is the foundation upon which investors base their investment decisions, and regulators learn more about compliance-related requirements. Since the RBI is in charge of regulating India’s financial and monetary systems, it must keep an eye on NBFCs’ financial health and may thus call for further disclosures.

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The NBFCs’ current disclosure requirements 

NBFCs must currently prepare their financial statements in accordance with the following rules:

  • Format specified in Division III of Schedule III to the 2013 Act and include all required disclosures. 
  • NBFCs that are listed on a recognised stock exchange in India are also required to comply with the disclosure requirements outlined in the SEBI Listing Regulations. 
  • If an NBFC falls within the scope of the Ind AS road map, it is also required to follow the Ind AS and provide the disclosures as per Ind AS. 

Along with these criteria, the RBI has occasionally imposed a set of regulatory disclosures that the NBFCs are required to report. RBI has recently pushed for more disclosures in the financial statements for the financial periods ending March 31 2023, through the SBR (Scale Based Regulation). The RBI further clarified these disclosure requirements through its circular titled “Disclosures in Financial Statements – Notes to Accounts of NBFCs” (disclosure rules), issued on April 19, 2022. 

Mandatory Disclosures in the Balance Sheet

The mandatory disclosure in the balance sheet by NBFCs is addressed in detail in paragraph 17 of the Non-Banking Financial Company – Systemically Important (SI) Non-Deposit Taking Company and Deposit-Taking Company (Reserve Bank) Directions, 2016.  

The balance sheet’s disclosure 

  • The provisions made in accordance with the Directions must be disclosed separately by each applicable NBFC in its balance sheet without being netted against income or the value of assets. 
  • The provisions must be clearly stated under two different heads of account, as follows:
  1. Provisions for bad and doubtful debts; and
  2. Provisions for depreciation in investment. 
  • Such provisions shall not be appropriated from the applicable NBFC general provisions and loss reserves, if any. 
  • The profit and loss account (P&L) will be debited for each year’s provisions. If there are any excess provisions, they must be written back without being adjusted against the general provisions and loss reserves. 
  • Each relevant NBFC must also provide the following information in its balance sheet in addition to the information mentioned above: 
  • a. Capital to Risk Assets Ratio (CRAR);
  • b. Direct and indirect exposure to the real estate sector; and
  • c. Asset and Liability Maturity Pattern.
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Under para 14, Instead of being subtracted from gross advances, the provision for standard assets must be listed separately as “Contingent Provisions against Standard Assets” on the balance sheet.

Next step 

The disclosure requirements outlined in the SBR disclosure rules are anticipated to increase the NBFC’s operational and governmental transparency. NBFCs have already disclosed some of the necessary data in accordance with existing laws and regulations. Thus, entities may make the additional disclosures mandated by SBR in addition to the current disclosure obligations, and they may cross-reference such information as needed to make sure the financial statements don’t contain duplicate information. Entities should also start getting ready for the data needs for some of the new disclosures mandated by the SBR.


These disclosure components promote transparency and aid in understanding the NBFC’s financial condition and performance among stakeholders, including investors, regulators, and the general public. It is crucial to remember that these components might not be all-inclusive and that certain laws and accounting rules might call for different disclosure aspects in the NBFC balance sheet. It is, therefore, advisable to follow every pertinent regulation.


  1. What are the NBFC’s disclosure requirements?

    Non-Banking Finance Companies (NBFCs) must disclose information in their financial statements in conformity with all applicable laws, regulations, accounting standards, and prudential guidelines.

  2. What information should be disclosed on the balance sheet?

    The assets and liabilities of a corporation are disclosed in the balance sheet. Depending on the business, this could include long-term assets like property, plant, and equipment or short-term assets like cash and accounts receivable.

  3. What is a Non-Banking Financial Company?

    A non-banking financial company is a business registered under the Companies Act of 1956that engages in the business of loans and advances, acquisition of stocks/bonds/shares/debentures/securities issued by the government or a local authority or other marketable securities of a like nature, leasing, hire-purchase, insurance business and chit business.

  4. What is mandatory disclosure in accounting?

    The mandatory disclosure policy is a set of guidelines that specifies which information must be included in the accounting system as a transaction and which information must not.

  5. What is the difference between mandatory and voluntary disclosure?

    Mandatory disclosure and voluntary disclosure are the two categories into which disclosure in the issuer’s annual report can be divided. The law mandates the necessary disclosure. Users of annual reports may freely choose to employ voluntary disclosure when making decisions.

  6. What is a disclosure in accounting?

    A disclosure is added information included with a company’s financial statements and typically explains actions that significantly affected the company’s financial results.

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NBFC Related Links


  1. https://en.wikipedia.org/wiki/Financial_statement

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