Insights of the NBFC compliance calendar In the current framework, the NBFC compliance calendar in India is rolling beyond the numbers and financial outlooks. It sketches a better picture. Their contributions extend beyond monetary transactions. They are also assisting the country's economy in growing by creating employment for the weaker section, creating wealth, and developing infrastructure and transportation as well. The reason behind the uprising of the NBFC compliance calendar in India as the institution in the current financial market is pushed by the increased demand for loans by small market businesses such as MSMEs (Micro, Small, and Medium Enterprises). They don't have strict control over the policies regarding the eligibility criteria, unlike the traditional banking system of India for the NBFC compliance requirement. Types of NBFC for NBFC compliance calendar The NBFC compliance calendar in India has been diversified into various categories, each of which specializes in different financial strata and services. They are as follows: Deposit-taking and systematically essential NBFC (Category A) These are the deposit-taking and systematically essential NBFC (Category A) which accepts deposits. The Reserve Bank of India (RBI) grouped the NBFC compliance calendar in India based on their primary activities for NBFC compliance requirements: NBFC-AFC (Asset Finance Company) These companies are responsible finance the acquisition of tangible assets like vehicles, equipment, machinery, and other physical goods. They play an important role in establishing a business to acquire essential assets for their operation for NBFC compliance requirements. Loan Company NBFC compliance calendar in India focuses on providing loans and advances to customers and businesses, and consumer loans are dedicated to accessing increased credit. Infrastructure Finance Company The NBFC compliance calendar in India provides funds and financial support to infrastructure projects such as roads, bridges, etc. Their role is optimal in supporting the country’s infrastructural development. Investment Company These companies are responsible for investing in securities like stocks, shares, bonds, debentures, and other financial instruments. They provide investment diversification for individuals and institutions to meet NBFC compliance requirements. Microfinance Institutions The NBFC compliance calendar in India provides small loans to low-income entities, individuals, self-help groups, and enterprises at the micro level. They contribute to the incoming finances and have made various efforts to reduce the poverty level by extending credit to underprivileged or jobless people in society for NBFC compliance requirements. Non-operative Financial Holding Company (NOFHC) If seen through the eyes of the RBI their regulatory requirements, are set up as the holding companies for the financial sector entities. They make sure that the financial conglomerates function in a well-structured environment. Non-deposit taking & non-systematically necessary NBFC (Category-B) This type of financial entity doesn't accept public deposits and is likely to have less impact on overall financial stability. The NBFC in India is subject to RBI norms and regulations but has a lesser impact on normalizing risk than deposit-taking for NBFC compliance requirements. Documental Requirements for NBFC Compliance Calendar To begin the NBFC compliance calendar in India, the company should meet the following conditions as follows- The certificate of incorporation of the applicant company should be paramount. A detailed brochure about the company's management and administration, such as the Board of Directors. The applicant company’s MOA (Memorandum of Association) and AOA (Articles of Association). KYC details, PAN number, and address proof are required for the applicant company. CIBIL Score or Credit reports of the applicant company of each director. Documents associated with the bank accounts, balances, loans, credits, etc. A certificate by the company’s auditor declaring that neither the company accepts any public deposits as of date, nor it did it in the past and it won’t do it in the future as well without getting the prior approval from the RBI. A copy of the audited balance sheet and reports for the past 3 about the company’s loss and profit. Self-certified copy of the company bank statements and income tax returns (ITR). Benefits of availing of NBFC compliance calendar Many benefits can be offered by the NBFC as compared to the traditional banking services in India for NBFC compliance requirements. These are as follows: Liberty concerning the interest rates Our NBFC compliance requirements can enjoy the freedom of fixing their rate of interest on the loans they are offering. The only condition that they should make a call on is not to cross the interest rate that has been prescribed by the RBI. More Flexible If you look at our conduct of the NBFC compliance calendar in India, then we will figure out that they are way more flexible as compared to the traditional banks, and that's the main reason behind their wide recognition and faith in the various sections of the Indian economy. Though the banks have limited reachability, NBFCs have done an excellent job of making their presence known, especially when we talk about rural areas. Trouble-free Processing of the loan amount Our NBFC compliance calendar requirement of the documents is much lesser and more flexible in the case of the NBFC compliance calendar in India as compared to the banks. It also offers satisfactory options for its customers. Consider a Low/Moderate credit score. While comparing it with traditional banks, our NBFC compliance calendar has much more flexible policies and even considers individuals with a lesser credit score to provide loans as the rules laid down for the NBFCs to lend by RBI are much lesser. Customer Services oriented Our NBFC compliance calendar usually provides customer-oriented service by facilitating a wide range of services apart from lending such as trading in money market instruments, educating financing support, investment advisory and retirement plans, etc. NBFC COMPLIANCE CALENDAR OBJECTIVE The Enterslice team took the initiative to create a comprehensive guide for Compliance Officers, CFOs, and Company Secretaries to provide a comprehensive overview of compliance reporting dates for various applicable laws in India. This version covers the most important laws under the Reserve Bank of India (RBI): Base Layer Middle Layer Upper Layer Top Layer And provide dates specified by various regulatory authorities. Our team is committed to constantly updating the compliance calendar by adding laws and ensuring regular updates. We encourage users to visit our website frequently to access the latest versions of the calendar. DISCLAIMER It is important to note that the relevant authorities can often change the regulations. Therefore, the reader/user should perform their due diligence before relying on this information. RETURNS APPLICABLE TO BASE LAYER: (a) Non-deposit-taking NBFCs below the asset size of ₹1000 crore and (b) NBFCs undertaking the following activities- (i) NBFC-Peer to Peer Lending Platform (NBFC-P2P), (ii) NBFC-Account Aggregator (NBFC-AA), (iii) Non-Operative Financial Holding Company (NOFHC) and (iv) NBFCs are not available for public funds and do not have any customer interface. RETURNS APPLICABLE TO THE MIDDLE LAYER The Middle Layer shall consist of: (a) All deposit-taking NBFCs (NBFC-Ds), irrespective of asset size, (b) Non-deposit-taking NBFCs with asset size of ₹1000 crore and above and (c) NBFCs undertaking the following activities (i) Standalone Primary Dealers (SPDs), (ii) Infrastructure Debt Fund - Non-Banking Financial Companies (IDF-NBFCs), (iii) Core Investment Companies (CICs), (iv) Housing Finance Companies (HFCs) and (v) Infrastructure Finance Companies (NBFC-IFCs). COMPLIANCES FOR BASE LAYER XBRL RETURN: S. No. Existing Return name in the COSMOS application New return name in the XBRL system New Frequency Due Date for filing To be submitted by NBFCs in the XBRL portal in the category of 1 NBS-8 DNBS02 Annual 60 days from the end of the financial year. Non-NDSI NBFCs having asset size < ₹500 crore NBS-9 2 Statutory Auditor Certificate DNBS010 Annually One month from the date of the final balance sheet but before December 31 Return for Statutory Auditor is to be filed in the XBRL system through the Statutory Auditor Module. A separate web link is below for your reference. 3 Overseas Return DNBS13 Quarterly 15 days from the end of the quarter Quarterly returns to be filed by NBFCs in XBRL which have overseas exposure 4 No Return in the COSMOS system. DNBS14 Quarterly Return for P2P platforms Other Regulatory Compliances S.no Particulars Events 1 Adoption of Fair Practice Code within 30 days of the end of the financial Year 2 Board Resolution for Non-Acceptance of Public Deposit. within 30 days of the end of the financial Year 3 PML/KYC Policy Adoption within 30 days of the end of the financial Year 4 Physical Submission of Financial Statement Within 30 days of the adoption of the financial statement. 5 Capital Requirement S.No. Capital Norms Capital Limit a. Existing capital for the company has a license before 01st October 2021. 2 Crore b. By March 31, 2025 5 Crore c. By March 31, 2027 10 Crore 6. NPA Classification S.No. NPA Norms Timeline a. >150 days overdue By March 31, 2024 b. >120 days overdue By March 31, 2025 c. > 90 days By March 31, 2026 7 Risk Management Committee To focus on Risk Management, NBFC Shall constitute a Risk Management Committee. 8 Disclosures Disclosure requirements shall be expanded, inter alia, to include types of exposure, related party transactions, loans to Directors/ Senior Officers, and customer complaints 9 Loans to directors, senior officers, and relatives of directors NBFC Shall have A board-approved policy to grant loans to its directors, senior officers, and relatives. COMPLIANCES FOR MIDDLE LAYER: S. No Existing Return name in the COSMOS application New return name in the XBRL system New Frequency Due Date for filing To be submitted by NBFCs in the XBRL portal in the category of 1 NBS-1 DNBS01 Quarterly NBFCs- Deposit Taking & NDSIs (having asset size > ₹500 crore) 2 NBS-2 & NBS-3 DNBS03 Quarterly NBFCs- Deposit Taking & NDSIs NBS-7 3 ALM-Structural Liquidity Statement & DNBS04A Monthly 15 days from the end of the quarter NBFCs- Deposit Taking & NDSIs ALM - Interest Rate Sensitivity 4 ALM-STDL DNBS04B Quarterly 10 days from the end of the month NBFCs- Deposit Taking & NDSIs 5 NBS-4 DNBS05 Quarterly Return for Rejected Deposit Taking NBFCs 6 Return for CICs DNBS12 Quarterly Return for CICs - Prudential Parameters Data 7 Return for CICs DNBS11 Quarterly Return for CICs - Balance Sheet Parameters Data OTHER REGULATORY COMPLIANCES S.No. Particulars Comments 1 Internal Capital Adequacy Assessment Process NBFCs shall make an internal assessment of the need for capital in proportion to the risks in their business 2 Concentration of credit/ investment Limits for Concentration of Credit/ investment has been revised: 1. Single Borrower/Party: 25. 2. Single group of borrowers/ parties: 40 3 Sensitive Sector Exposure Exposure to real estate and capital markets are sensitive sectors, and the board shall decide on internal limits to the sensitive sector. 4 Regulatory restrictions on loans 1. Loans and advances to directors, their relatives, and entities where directors or their relatives have a major shareholding. 2. Granting loans and advances to Senior Officers of the NBFC Shall be subject to regulatory restrictions. 5 Key Managerial Personnel Except for directorship in the subsidiary, KMP shall not hold any office (including directorship) on any other NBFC-ML or NBFC-UL. 6 Independent Director An Independent can be on the board of 3 NBFCs only, Subject to there being no conflict arising in other companies in being 1. 7 Disclosures Disclosure requirements for annual financial statements have been increased. 8 Chief Compliance Officer NBFCS needs to have a chief compliance officer who should be sufficiently senior. 9 Compensation guidelines The guidelines shall, at the minimum, include, a constitution of a Remuneration Committee, b principles for fixed/ variable pay C malus/ claw back provisions 10 Other Governance Matters 1. Shall formulate various committees, define their roles, and lay down a calendar for review. 2. Whistle Blower Mechanism for directors and employees. 3. Good Corporate Governance Practice. 11 Core Banking Solution NBFCs with 10 or more branches need to adopt a Core Banking Solution. OTHER REGULATORY COMPLIANCES FOR UPPER LAYER: S.No. Particulars Comments 1 Large Exposure Framework large exposure of an NBFC to all counterparties and groups of connected counterparties will be considered for exposure ceilings 2 Internal Exposure Limits It Shall be determined for another important sector along with Capital Market and Commercial Real estate. 3 Qualification of Board Members The mix of educational qualifications and the director's experience shall matter. 4 Listing & Disclosures Listing needs to be done within 3 Years of identification as NBFC-UL. 5 Removal of Independent Directors In case of Removal, the Independent director needs to be removed from the Supervisor. Conclusion In the end, we can conclude that the NBFC compliance calendar plays a very vital role in scheduling the organizing compliance activities in advance and also in avoiding last-minute penalties for non-compliance. It makes sure that NBFCs remain in good standing with regulatory authorities by meeting all legal obligations on time as per the NBFC compliance requirements.
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