Operational Manual NBFCs in India

Non-Banking Financial Company (NBFC) is basically an entity registered under the Companies Act, 1956, which offers financial services such as loans and advances. All NBFCs are registered under the RBI Act 1934, and are governed by the Reserve Bank of India (RBI)

Income recognition by the NBFCs shall be done on the basis of the recognized accounting standards by ICAI. Accordingly,

• Income that includes interest or any other charges with respect to all types of NPAs shall be recognized only when realized.
• Accordingly, income from all NPA shall be recognized on `Cash’ basis.
• Any such income to be recognized before the asset became NPA. Remaining unrealized income shall be derecognized and reversed