NBFC

Submission of Information with respect to change of Directors, Address, Auditors, etc. by NBFC to the RBI

To maintain compliance with regulations and efficient supervision, Non-Banking Financial Companies (NBFCs) in India are required to provide several types of information and reports to the Reserve Bank of India (RBI). Depending on the NBFC nature, size and regulatory framework, the precise data and reports should be submitted to the Reserve Bank of India.

Information with respect to address, directors, auditors, etc., are mandatory elements that should be submitted from time to time to Reserve Bank. Suppose any changes occurred in the company regarding the directors, auditors and the address. In that case, that should also be submitted to the Central bank of India; Reserve Bank of India as per the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 2016.

Non-Banking Financial Companies

A company that is registered under the Companies Act of 1956 and engaged in the business of loans and advances, the purchase of shares, stocks, debentures, bonds, securities, or other marketable securities of a similar nature issued by the government or a local authority, insurance business, leasing, hire-purchase, or chit business is considered an NBFC. However, an institution whose primary business is agriculture, industrial, providing services, or sale/purchase/construction of immovable property is not considered an NBFC.

An NBFC-RNBC (Residuary Non-Banking Company) is a non-banking organization that is a company with the primary objective of receiving deposits under any scheme or arrangement by contributions or other means.

Top NBFCs in India perform duties similar to those of banks. However, there are certain differences between the two. NBFCs, for instance, are unable to accept demand deposits, unlike banks. NBFCs are not included in the payment and settlement system and are not permitted to issue checks drawn on themselves. 

RBI with the Responsibility of regulating NBFCs

The Reserve Bank of India oversees and regulates NBFCs and provides them with operating instructions. The Reserve Bank of India Act, 1934¹, Chapter III B lists the powers of RBI. The main objectives are:

• To guarantee the financial institutions’ healthy expansion.
• Make sure that, as a component of the financial system, these businesses adhere to the regulatory framework in a way that prevents systemic aberrations from being caused by their existence or operation.
• By keeping up with changes in this area of the financial system, the RBI is able to maintain the standard of oversight and surveillance it exercises over NBFCs.

Regulation 37 of the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 2016 

Information regarding the change of address, directors, auditors, etc. to be submitted –

Every non-banking financial company must notify the Reserve Bank of India of any changes to the following information within one month of the occurrence of the change, which is discussed in detail below:

(i) the complete postal address, phone number(s), and fax number(s) of the registered/corporate office; 

(ii) the names and residential addresses of the company’s directors; 

(iii) the names and official designations of its principal officers; and

(iv) the specimen signatures of the officers authorised on behalf of the company to sign; and

(v) The names and office addresses of the company’s auditors.

Non-Banking Financial Companies (NBFCs) in India are required to provide the RBI with specific information regarding changes to their address, board of directors, auditors, and other important changes. 

Changes to Registered Office Address – NBFCs must inform the RBI of any changes to their registered office address within 30 days. The new address information should be included in this notification, along with any necessary supporting documentation, such as the board resolution authorising the move and a copy of the letter informing the Registrar of Companies of the address change.

Change in Directors – Within a month of any changes that occur in their board of directors, NBFCs are required to notify the RBI. The details of the outgoing and incoming new directors, including their names, residences, educational qualifications, work experience, and director identification number (DIN), must be submitted to the Reserve Bank. The board resolution accepting the resignation or appointment of directors should be included with the notification.

Change of Auditors – NBFCs must notify the RBI of any change of auditors. Information on the outgoing and incoming auditors, including their names, residential addresses, registration numbers, and the reasons for the change, should be included in the notification. A board resolution acknowledging the resignation or appointment of auditors should be used to support it. 

Key Managerial Personnel/ Principal Officer – Within 30 days of any changes to their key managerial personnel or principal officers, NBFCs must inform the RBI of those changes. Their names, residences, educational backgrounds, professional experiences, and other pertinent information should all be included in the report.

Other Reporting Requirements – In addition to the above-mentioned, NBFCs may be required to submit to the RBI for further material changes. Changes in the ownership structure, control, shareholding patterns, or any other important details that can have an impact on the NBFC’s operations or compliance could fall under this category.

As per Chapter – VII (Reporting Requirements), all NBFCs are required to follow the reporting requirements as prescribed by the Department of Non-Banking Supervision.

Conclusion

NBFCs should follow the RBI’s reporting deadlines for these changes in the company. The RBI’s Master Directions or circulars may contain precise instructions or directions on reporting formats and procedures, which NBFCs should review to ensure compliance. The RBI is in the authority to make changes to the regulatory structure and policies. It is advised to frequently visit the RBI website and stay updated with the modifications or changes pertaining to reporting requirements. 

Read Our Article: What is a Non Banking Financial Company (NBFC)?

1. https://rbidocs.rbi.org.in/rdocs/Publications/PDFs/RBIAM_230609.pdf