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Non-banking financial companies (NBFCs) in India have struggled to properly manage compliance duties due to the Reserve Bank of India’s (RBI) special regulations for the industry. Non-Banking Financial Companies are incorporated under the Companies Act of 2013[1] and engage in the business of accepting deposits, loans, and advances, as well as the purchase of stocks, bonds, and shares, as well as debentures and other government instruments. NBFCs are registered with the Reserve Bank of India and actively engaged in financial activity. The Reserve Bank of India’s license is required for the operation of any NBFC. NBFCs must comply with specific rules and filing requirements, much like banks, and must do so on a regular basis. Failing to do so may result in serious penalties or even the cancellation of the NBFC Registration Certificate.
The RBI has shifted from the COSMOS platform to the XBRL system for the current supervisory return filing process on online. NBFCs must therefore possess the following in order to submit returns on the brand-new XBRL portal:
The NBFC Compliances & Returns for each month, quarter, and year are listed below:
In addition to the NBFC Compliances mentioned above, non-banking firms are required to adhere to the following rules:
The Prevention of Money Laundering Act of 2002 and the Integrated Ombudsman Programme of 2021 require NBFCs to comply with thousands of rules and hundreds of acts, depending on the scale of their operation. The adherence to the regulations set forth by the NHB and RBI creates additional pressure.
The following are some of the main compliance difficulties that the NBFC sector has to deal with:
Considering the difficulties in maintaining compliance in order to operate NBFCs, a few methods were suggested in their research that might help them.
Following these solutions will help with the difficulty in maintaining compliance. One of the major forces behind the Indian economy’s expansion is the NBFC industry. It provides for a segment of society that commercial banks typically do not service.
The operations of non-banking financial enterprises are governed and monitored by the Reserve Bank of India. As a result, the RBI has established a list of requirements that all registered NBFCs must adhere to. The management of an NBFC must be well aware of these compliances and keep up with any changes to them. Following the RBI compliance requirements for NBFC is crucial if you want to remain competitive in the industry. If an NBFC doesn’t follow the RBI checklist, they’ll be penalised with stiff fines or even the cancellation of NBFC registration.
Also Read: All about NBFC Annual Compliance in India
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