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Overview Roles Benefits Procedure DocumentsCheck Points Faqs Schedule Meeting Non-Banking Financial Company Due Diligence- An Overview Non-Banking Financial Company due diligence is a process that involves assessing the various aspects of the company. It is carried out by professionals, including auditors, lawyers, compliance specialists, and chartered accountants. With Enterslice’s network of 10,000+ professionals, including CAs, CS, Lawyers, etc., we strive to provide tailored solutions to ensure the smooth functioning of your NBFC, so you can focus on what really matters for your business, generating large profits. Utilize our services for NBFC due diligence and easily monitor compliance. KYC-AML Compliance Annual Tax Reporting Financial Audit Analysis RBI-Prescribed Compliance Expertise IT Infrastructure Assessment Legal Disputes & Notice Assessments Agreement & NDA Reviews IPR Monitoring and Renewals Evaluation of Foreign Direct Investment Fulfil Your NBFC Due Diligence with Enterslice Complete your NBFC due diligence compliance obligations with Enterslice’s expert compliance guidance. Speak to our regulatory experts via the 30-minute consultation facility offered by Enterslice. Get Started Now Key Areas in the NBFC Due Diligence Process Find out the key areas in the NBFC due diligence process in India, as explained below: Corporate Review of the company’s charter, memorandum of association, and articles of association. Foreign Direct Investment Examination of all types of FDIs to ensure compliance with RBI and international investment authorities. Financial Accounting Statements Evaluation and analysis of balance sheets, income statements, and expense reports for NBFC due diligence. Real Estate Assets and Property Complete assessment of properties owned and rented by the NBFC. Human Resources Compliance and alignment with labour laws and examination of the HR workforce. NBFC’s IPR Review, renewal, and examination of NBFC’s intellectual properties (IPR), including trademarks, copyrights, patents, and designs. Meetings Analysis of the annual general meetings to ensure appropriate decision-making and smooth internal functionality of the NBFC. Agreements Analysis and review of various types of agreements, including mortgage, lease, rental space, and partnership agreements. Secretarial Compliance Authentication of company record-keeping and mandatory reporting obligations. RBI-Specific Compliance Ensuring complete compliance with the Reserve Bank of India’s post-registration rules. Civil/Legal Disputes Monitoring of outstanding lawsuits and related proceedings. Insurance Compliance Evaluation of insurance claims and risk mitigation by the management. Taxation Compliance Scrutiny of corporate income, GST, personal tax, TDS, property, or other relevant tax return filings and payments. Benefits of NBFC Due Diligence in India Explore the various NBFC due diligence, including protection of clients, ensuring compliance with the RBI, and improving the governance of the company. Risk Management During the due diligence, you can find non-performing assets (NPA) and financial irregularities, helping resolve legal disputes, avoid penalties, and settle customer issues. Compliance The NBFC due diligence assists in complying with RBI, Companies Act 2013, and FEMA to prevent license or registration revocation. Enhances Company Valuation Due diligence provides an overview of the legal entity’s financial position, helping stakeholders and investors make informed decisions before mergers. Improves IT Infrastructure Assessment and improvement of the technical infrastructure prevent system failures and security breaches of data. Increase Creditworthiness A due diligence report demonstrates reliability and credibility to investors, venture capitalists, and stakeholders. Brand Recognition Regular due diligence compliance establishes brand and competitive edge, promoting transparency and good corporate governance. Fraud Detection & Prevention KYC and AML investigations help uncover unusual, suspicious, or fraudulent transactions, supporting anti-money laundering and counter-terrorism efforts. Legal Compliance to Be Checked for NBFC Due Diligence To fulfil NBFC due diligence, the following legal compliance must be thoroughly checked as per the RBI guidelines: Creation of Statutory Reserve: In accordance with section 45-IC of the Reserve Bank of India Act of 1934, all NBFCs must create a reserve fund with 20% of their net profit before dividend distribution. Registration of the NBFC with the KYC Portal: Each NBFC should be registered with the KYC portal with complete information and documentation. Enrolment & Subsequent Registration with the Financial Intelligence Unit (FIU-Ind): Every NBFC must authenticate the identity of its clients and furnish their records to the Financial Intelligence Unit of India in accordance with the Prevention of Money Laundering Act of 2002 and subsequent regulations. Appointment of Nominated Counsels: NBFCs that are legally entitled to use Sections 13 and 14 of the SARFAESI Act must appoint “nominated counsels” in the designated state’s high court. After such nomination, the entity is obligated to notify the Central Registry of Securitisation, Asset Reconstruction, and Security Interest (CERSAI). Acquirement of Credit Information Company (CIC) Membership: The Non-Banking Financial Company due diligence is incomplete without its membership with the CIC as per the RBI rules. Statutory Audit Report Submission to RBI: The auditor’s report and statutory audit certificate must be verified as part of the NBFC due diligence compliance. Financial Compliance for NBFC Due Diligence The financial compliance for NBFC due diligence includes reviewing financial statements, comparing debt-to-equity ratios, and assessing the monetary value of the entity. Examination of Financial Reports: Your authorized auditor must conduct a review of the NBFC’s balance sheets, profit & loss, and cash inflow statements. You must check how asset allocation takes place in accordance with the RBI guidelines. The evaluation of the company’s leverage and liquidity should be checked by the investigator. Assessment of Debt and Equity: We’ll examine the company’s assets to identify the danger zones and recurrence of using numerous asset instructions. We’ll also evaluate the different types of debts and liabilities. Evaluation of the Entity’s Profitability: As your compliance officer, we’ll compare the debt-to-equity ratios in terms of the profit and loss margin over time. A comparative study must be carried out on how the ratios affect the company’s finances. Operations Compliance for Non-Banking Financial Company Due Diligence Operations compliance for Non-Banking Financial Company due diligence is required to check if the entity is working efficiently as per its objectives. The compliance is carried out as described below: Examination of the Business Model: We’ll check how your NBFC lends, invests, and carries out its financial activities in accordance with your business plan and model. Identifying the Target Market: Our market research analyst will identify and evaluate the target market. They’ll review the markets where your NBFC services are in high demand with the target consumers. Evaluating the Competitors: We’ll assess your competitors’ products and services to enhance your market strategy and product reputation in the market. Our associates will ensure to pinpoint the exact issues that require your key attention in order to stand out as your NBFC. Sustainability Check: To ensure your entity stands tall against the market fluctuation, we’ll conduct an in-depth analysis of the market trends, regulatory amendments, and financial sustainability against your NBFC’s commercial model. How to Complete NBFC Due Diligence with Enterslice? Scroll down and find out how you can complete NBFC due diligence on various aspects, including legal, AML, financial, and tax, with Enterslice’s expert guidance. Contact us- 30-Minute Consultation Contact and engage with our business expert to get guidance as per your company’s requirements. Preparation of Checklist Once you’ve signed up with us, we’ll assign an individual professional for the type of diligence you want conducted through us. Legal, financial, accounting, or Tax. Identification of Sources We’ll identify and review various records, including pending legal disputes, financial statements, company incorporation statements, tax receipts, and statutory reserves. Investigation Once we’ve identified the area, we’ll put our best auditors and professionals to investigate it to record any discrepancies. Due Diligence Completion After checking the authenticity of all documents, finding problem areas, and taking effective measures to address the issues with solutions. Documents for Non-Banking Financial Company Due Diligence The list of documents required for a non-banking financial company due diligence: Memorandum of Association (MOA) Articles of Association (AOA) A copy of the original incorporation certificate Meeting minutes of MOM compliance Bank statements Audited balance sheets and account statements Cash flow information Details about all the clients A well-structured NBFC business model Information on employees in the NBFC Annual tax return receipts Statement on computation of income tax liability VAT returns payment receipts TDS returns Materials agreements IPR agreements Net-worth certificate Checkpoints for Non-Banking Financial Company Due Diligence Check out the basic checkpoints for Non-Banking Financial Company Due Diligence as listed below: The company must be registered as an NBFC by the Reserve Bank of India (RBI). It should be in compliance with Section 45-IC of the Reserve Bank of India Act of 1934. The applicant must list the complete company information and authorized capital. Company registration certificate with ID and date of incorporation Last date of the annual general meeting. Deposited paid-up capital. The current status of the company. Latest balance sheet and income statement Number of secured loans Details of the authorized lenders of the company. Details of directors and managing director Certificate of membership of a Credit Information Company (CIC) Audited financial statement by a certified CA. Points to Remember for NBFC Due Diligence Remember the key points for collecting information and conducting NBFC due diligence as mentioned below: Preparation of a checklist of different kinds of information. Identification of the sources of the collected data. Assembling the documents. Appointment of professionals for the collection and conduct of the said due diligence compliance. Analysis of market trends and fluctuations. Key Cases Where NBFC Due Diligence is Required Have a look at the key cases where NBFC due diligence is required- Mergers and Acquisitions (M&A) Investment and Funding from Investors and Venture Capitalists Regulatory Compliance and Licensing Risk Assessment and Credit Rating Expanding into New Markets or Products Debt Recovery and Restructuring Fraud Prevention and Forensic Investigations Asset Quality Review (AQR) Financial Restructuring or Insolvency Why Trust Enterslice for NBFC Due Diligence? We have over a decade of experience as India’s top compliance service provider. Get started with us for NBFC due diligence from anywhere in India. Below are the key reasons why you should trust Enterslice for NBFC due diligence compliance: A network of 10,000+ lawyers, compliance specialists, CAs, and CS Stress and error-free filing 30% turnaround time for a non-banking financial company due diligence Covering around 100+ cities No hidden charges - transparent pricing structure No government visits required - complete your obligation from the comfort of your phone Lifetime free consultation after you sign up for NBFC due diligence services Full end-to-end client support by experienced professionals with a combined experience of 40 years Get real-time updates on your service process via the individual manager Frequently Asked Questions on NBFC Due Diligence What is the meaning of NBFC due diligence compliance? A non-banking financial company's due diligence is a voluntary procedure that helps identify potential risks within the organization. What are the key aspects of non-banking financial companies’ due diligence? The major areas of NBFC due diligence are as follows: Foreign direct investment (FDI) Financial statements of the company Human resources IPR held by the NBFC Certificate of KYC registration and other compliance with the RBI Agreements entered into by the company Legal disputes, pending and otherwise, in the entity’s name Insurance claims of the company Tax receipts and other related regulatory compliance requirements What is the importance of NBFC due diligence? The key advantages of due diligence compliance are as follows: It identifies accounting and financial inaccuracies and risks. The diligence process helps prevent fraud and misreporting. It protects the lenders from credit risks. The due diligence helps investors and stakeholders make sound decisions. Who is eligible to conduct NBFC due diligence? The list of individuals and entities that are eligible to conduct a non-banking financial company is as follows: Chartered Accountants Investment bankers Financial advisors Compliance service providers Company secretary (CS) Legal professional advisories Risk consultants What documents are important for NBFC due diligence? The documents needed for a non-banking financial company due diligence are as follows: The NBFC certificate of registration by the RBI. The GST and Permanent Account Number (PAN). Tax Deduction Account Number (TAN) registration ID. Incorporation documents, including MOA, AOA, company charter, net owned fund certified by a CA, and a registered business office address agreement (lease or rental). A resolution of the board of directors. Minutes of meetings on important decisions. Audited financial statements of auditors Net worth of the NBFC certified by a chartered accountant. When is NBFC due diligence compliance required? The NBFC due diligence compliance is needed during: Operational improvement assessment Mergers and acquisitions Partnership with fintech and digital lenders Regular audits are conducted for the detection of fraudulent activities and financial irregularities. To improve risk and IT infrastructure. To comply with statutory audits by the Indian tax authorities. What is the key difference between an NBFC due diligence and a statutory audit? A statutory audit is conducted by a certified auditor, and it is legally mandated, whereas an NBFC compliance is conducted to enhance the systems and comply with RBI guidelines and latest innovation alignments. How long does the NBFC due diligence compliance process take to complete? The RBI mandates that one take around 3 to 6 months. However, a voluntary one can take up to 3 to 6 weeks, depending on the size and departments of the NBFC. What are the common errors found during a Non-Banking Financial Company due diligence? Non-compliance with RBI regulations. Large amount of non-performing assets (NPAs) and unsecured loans disbursals. Outdated IT systems Pending legal disputes and unresolved customer complaints. Tax fraud, unpaid tax returns, late filings, and GST mismatches. Weak risk mitigation system. Financial fraud and anti-money laundering. What is commercial compliance for a Non-Banking Financial Company due diligence? The commercial compliance, also known as operations compliance due diligence, includes the following: Evaluation of the NBFC compared to its competitors. Examination of the customers’ relationship with the RBI-registered entity. Checking the company’s brand reputation in the consumer market. Analysis of the sales and market strategies to increase the quarterly and annual targets, enhancing the business growth. Cross-examining the company’s future goals with its current success graph. Ensuring the targets are being met as per the model and plan. What are the primary types of legal compliance for NBFC due diligence? The list of main legal compliances that all NBFCs must follow is as follows: Transfer of 20% of annual profits before dividend distribution. Mandatory KYC registration Confirmation of client identities in accordance with the PMLA rules through FIU registration. Appointment of a counsel (high court) and subsequent registration on CRILC pursuant to the SARFAESI Act. Obtaining membership in RBI-approved credit information companies. Continuous monitoring of RBI circulars and news updates to timely alignment with regulatory policies. What are the key areas for IT infrastructure for non-banking financial company due diligence? The main points to check for an IT due diligence for an NBFC entity are as follows: Review of the web-site policies, including terms & conditions, privacy, refund, child safety policies. Evaluation of the vendor risk mitigation policy. Examination of the servers, networks, firewalls, cloud storage, and hard drive. Complete overhaul of the cybersecurity, including security tools, threat detection systems, insurance policy, logs, and audit trails. Review of third-party vendors and related service level agreements (SLAs) and non-disclosure agreements (NDAs). Assessment of the API systems and security integration. Alignment of the entire IP infrastructure with regulatory policies and requirements.
Non-Banking Financial Company due diligence is a process that involves assessing the various aspects of the company. It is carried out by professionals, including auditors, lawyers, compliance specialists, and chartered accountants.
With Enterslice’s network of 10,000+ professionals, including CAs, CS, Lawyers, etc., we strive to provide tailored solutions to ensure the smooth functioning of your NBFC, so you can focus on what really matters for your business, generating large profits. Utilize our services for NBFC due diligence and easily monitor compliance.
KYC-AML Compliance
Annual Tax Reporting
Financial Audit Analysis
RBI-Prescribed Compliance Expertise
IT Infrastructure Assessment
Legal Disputes & Notice Assessments
Agreement & NDA Reviews
IPR Monitoring and Renewals
Evaluation of Foreign Direct Investment
Complete your NBFC due diligence compliance obligations with Enterslice’s expert compliance guidance. Speak to our regulatory experts via the 30-minute consultation facility offered by Enterslice.
Find out the key areas in the NBFC due diligence process in India, as explained below:
Review of the company’s charter, memorandum of association, and articles of association.
Examination of all types of FDIs to ensure compliance with RBI and international investment authorities.
Evaluation and analysis of balance sheets, income statements, and expense reports for NBFC due diligence.
Complete assessment of properties owned and rented by the NBFC.
Compliance and alignment with labour laws and examination of the HR workforce.
Review, renewal, and examination of NBFC’s intellectual properties (IPR), including trademarks, copyrights, patents, and designs.
Analysis of the annual general meetings to ensure appropriate decision-making and smooth internal functionality of the NBFC.
Analysis and review of various types of agreements, including mortgage, lease, rental space, and partnership agreements.
Authentication of company record-keeping and mandatory reporting obligations.
Ensuring complete compliance with the Reserve Bank of India’s post-registration rules.
Monitoring of outstanding lawsuits and related proceedings.
Evaluation of insurance claims and risk mitigation by the management.
Scrutiny of corporate income, GST, personal tax, TDS, property, or other relevant tax return filings and payments.
Explore the various NBFC due diligence, including protection of clients, ensuring compliance with the RBI, and improving the governance of the company.
During the due diligence, you can find non-performing assets (NPA) and financial irregularities, helping resolve legal disputes, avoid penalties, and settle customer issues.
The NBFC due diligence assists in complying with RBI, Companies Act 2013, and FEMA to prevent license or registration revocation.
Due diligence provides an overview of the legal entity’s financial position, helping stakeholders and investors make informed decisions before mergers.
Assessment and improvement of the technical infrastructure prevent system failures and security breaches of data.
A due diligence report demonstrates reliability and credibility to investors, venture capitalists, and stakeholders.
Regular due diligence compliance establishes brand and competitive edge, promoting transparency and good corporate governance.
KYC and AML investigations help uncover unusual, suspicious, or fraudulent transactions, supporting anti-money laundering and counter-terrorism efforts.
To fulfil NBFC due diligence, the following legal compliance must be thoroughly checked as per the RBI guidelines:
The financial compliance for NBFC due diligence includes reviewing financial statements, comparing debt-to-equity ratios, and assessing the monetary value of the entity.
Operations compliance for Non-Banking Financial Company due diligence is required to check if the entity is working efficiently as per its objectives. The compliance is carried out as described below:
Scroll down and find out how you can complete NBFC due diligence on various aspects, including legal, AML, financial, and tax, with Enterslice’s expert guidance.
Contact and engage with our business expert to get guidance as per your company’s requirements.
Once you’ve signed up with us, we’ll assign an individual professional for the type of diligence you want conducted through us. Legal, financial, accounting, or Tax.
We’ll identify and review various records, including pending legal disputes, financial statements, company incorporation statements, tax receipts, and statutory reserves.
Once we’ve identified the area, we’ll put our best auditors and professionals to investigate it to record any discrepancies.
After checking the authenticity of all documents, finding problem areas, and taking effective measures to address the issues with solutions.
The list of documents required for a non-banking financial company due diligence:
Memorandum of Association (MOA)
Articles of Association (AOA)
A copy of the original incorporation certificate
Meeting minutes of MOM compliance
Bank statements
Audited balance sheets and account statements
Cash flow information
Details about all the clients
A well-structured NBFC business model
Information on employees in the NBFC
Annual tax return receipts
Statement on computation of income tax liability
VAT returns payment receipts
TDS returns
Materials agreements
IPR agreements
Net-worth certificate
Check out the basic checkpoints for Non-Banking Financial Company Due Diligence as listed below:
Remember the key points for collecting information and conducting NBFC due diligence as mentioned below:
Have a look at the key cases where NBFC due diligence is required-
We have over a decade of experience as India’s top compliance service provider. Get started with us for NBFC due diligence from anywhere in India. Below are the key reasons why you should trust Enterslice for NBFC due diligence compliance:
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