NBFC Compliance Calendar

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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-

  1. The certificate of incorporation of the applicant company should be paramount.
  2. A detailed brochure about the company's management and administration, such as the Board of Directors.
  3. The applicant company’s MOA (Memorandum of Association) and AOA (Articles of Association).
  4. KYC details, PAN number, and address proof are required for the applicant company.
  5. CIBIL Score or Credit reports of the applicant company of each director.
  6. Documents associated with the bank accounts, balances, loans, credits, etc.
  7. 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.
  8. A copy of the audited balance sheet and reports for the past 3 about the company’s loss and profit.
  9. 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):

  1. Base Layer
  2. Middle Layer
  3. Upper Layer
  4. 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.

Frequently Asked Questions

The mandatory requirements for the NBFC compliance calendar include infor-mation technology policy, know the customer policies and laws related to anti-money laundering measures, also the fair practice code.

The NBFC compliance calendar as per the RBI guidelines as per the provisions of Section-45-1A of the Reserve Bank of India, 1934 as NBFC can carry on business or commerce through obtaining the certificate of registration.

The NBFC is required to maintain the liquid assets on the outstanding liabilities with respect to the public deposits together with the interest accrued thereon.

The term loan for the NPA is when the instalments for the overdue amount for the period of six months, and similarly for the lease and HP assets also become NPA for the rentals and the instalments for the overdue period of 12 months instead of overdue for the period more than 12 months.

The NBFC compliance calendar includes comprehensive scheduling of the outlines of all the regulatory filings, as well as the due dates and other compliance activi-ties, for the NBFC throughout the financial year.

The NBFC compliance calendar is important for planning and organizing compli-ance activities in advance, avoiding last-minute workings, and also avoiding penal-ties and fines for non-compliance with the NBFC compliance requirements.

The key components included in the NBFC compliance calendar are the quarterly return filing, the annual return filing, the Know Your Customer updates, the sub-mission of the financial statements, and any other regulatory notifications that need to be adhered to.

The NBFC compliance calendar has to be updated annually to reflect any changes in the regulatory requirements or any deadlines and the NBFC needs to consult the late version of the NBFC compliance calendar.

Yes, the NBFC can restructure its calendar according to its needs, which include internal compliance checks, board meetings, and other internal guidelines to align with regulatory requirements.

There are such practices for managing the compliance calendar through the NBFC compliance calendar, such as regularly updating the compliance calendar to reflect any regulatory changes, assigning the responsibilities for each compliance activity, and conducting regular compliance training of staffing.

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