Non Banking Financial Companies - STATUTORY COMPLIANCE FOR NON BANKING FINANCE COMPANIES

1. A.     FORMATION

1. The company is to be formed pursuant to Companies Act, 1956

1. B.     REGISTRATION

2. The company is to be registered with the Reserve Bank of India pursuant to Reserve Bank of India Act, 1934

3. Application is to be made to RBI along with the documents as required.

1. C.     BUSINESS OF NON BANKING FINANCIAL COMPANIES

1)  the financing, whether by way of making loans or advances or otherwise, of any activity other than its own:

2) the acquisition of shares, stock, bonds, debentures or securities issued by a Government or local authority or other marketable securities of a like nature:

3) letting or delivering of any goods to a hirer under a hire-purchase agreement as defined in clause (c) of section 2 of the Hire-Purchase Act, 1972:

4) the carrying on of any class of insurance business;

5) managing, conducting or supervising, as foreman, agent or in any other capacity, of chits or kuries as defined in any law which is for the time being in force in any State, or any business, which is similar thereto;

6) collecting, for any purpose or under any scheme or arrangement by whatever name called, monies in lumpsum or otherwise, by way of subscriptions or by sale of units, or other instruments or in any other manner and awarding prizes or gifts, whether in cash or kind, or disbursing monies in any other way, to persons from whom monies are

7) a financial institution which is a company;

8) a non-banking institution which is a company and which has as its principal business the receiving of deposits, under any scheme or arrangement or in any other manner, or lending in any manner;

9) such other non-banking institution or class of such institutions, as the Bank may, with the previous approval of the Central Government

1. D.    CAPITAL REQUIREMENTS

2. The company should have the net owned fund of Rs. 25 Lacs.

3. The net owned fund has been defined undr Chapter IIIa of RBI Act, 1934.

4. Maximum Capital of NBFC should not exceed Rs. 200 Lacs.

1.  E.  CAPITAL ADEQUCY for NBFC-ND-SI

2. Non Banking Financial Companies- Non Deposit taking/holding- Systematically Important

3. This requirement is for the companies whose NBFC- ND with an asset size of Rs. 100 cr or more as per the last audited balance sheet.

4. The companies are required to maintain Capital to Risk Weighted Assets Ratio (CRAR) of 15%.

5. The companies will devise their own exposure norms in respect of single company and the group of companies to which it belongs.

1. F.  SUBMISSION OF ANNUAL STATEMENT AND RETURNS

2. NBFC-ND-SI  are required to submit annual statement of capital funds, risk assets ratio etc. in form NBS-7 within a period of 3 years from the close of the year. The same could be submitted electronically as well as physically. User ID and Passwords are required to be obtained from

3. Further Capital Adequacy, Liquidity and other disclosure norms have been incorporated in Non-Banking Financial (Non Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007.

1. i.  Capital Adequacy of 15% to be maintained.

2.  ii. Disclosures in the Balances Sheet

1. CRAR

2. Exposure to Realty Sector both direct and indirect

3. Maturity Patterns for assets and liabilities

4. ALM Returns are required to be submitted by NBFC- ND-SI

1.  i. ALM1- Statement of short term dynamic liquidity- Monthly

2. ii.  ALM2- Statement of short term structural liquidity- Half Yearly

3. iii. ALM3- Statement of Interest Rate Sensitivity – Half Yearly

1. G.     CAPITAL COMPOSITION

1. Perpetual Debt Instruments would comprise of 15% of the Tier Capital to the maximum extent.

1. H.    FURHTER RULES & REGULATIONS

1. Reserve Bank of India Act, 1934
2. Master Circular on Bank Finance to Non Banking Finance Companies
3. Non-banking Supervision Jul 01, 2010
4. Master Circular on directions/instructions issued to the Securitisation Companies/ Reconstruction Companies61 kb
5.  Notification as amended up to June 30, 2010 - The Securitisation Companies and Reconstruction Companies (Reserve Bank) Guidelines and Directions, 2003123 kb
6.  Notification as amended up to June 30, 2010 – “Mortgage Guarantee Company (Reserve Bank) Guidelines, 2008”57 kb
7. Master Circulars- Miscellaneous Instructions to All Non-Banking Financial Companies83 kb
8. Notification as amended up to June 30, 2010 – “Mortgage Guarantee Companies Prudential Norms (Reserve Bank) Directions, 2008”66 kb
9. Master Circular - Returns to be submitted by NBFCs60 kb
10. Master Circular- Exemptions from the provisions of RBI Act, 193491 kb
11. Notification as amended up to June 30, 2010 – “Mortgage Guarantee Companies Investment (Reserve Bank) Directions, 2008”31 kb
12. Master Circulars- Miscellaneous Instructions to NBFC- ND-SI48 kb
13. Master Circular – Corporate Governance28 kb
14. Master Circular - allied activities- entry into insurance business, issue of credit card and marketing and distribution of certain products29 kb
15. Master Circular - Fair Practices Code32 kb
16.  Notification as amended up to June 30, 2010 – “Non-Banking Financial Companies Auditor’s Report (Reserve Bank) Directions, 2008.”36 kb
17. Notification as amended up to June 30, 2010 - Change in or Take Over of the Management of the Business of the Borrower by Securitisation Companies and Reconstruction Companies (Reserve Bank) Guidelines, 2010144 kb
18. Master Circular – 'Know Your Customer' (KYC) Guidelines – Anti Money Laundering Standards (AML) -'Prevention of Money Laundering Act, 2002 - Obligations of NBFCs in terms of Rules notified thereunder’2543 kb
19. Notification as amended up to June 30, 2010 – “Miscellaneous Non-Banking Companies (Reserve Bank) Directions, 1977”349 kb
20. Master Circular-Frauds – Future approach towards monitoring of frauds in NBFCs209 kb
21. Notification as amended up to June 30, 2010– “Non-Banking Financial (Non - Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007”176 kb
22. Notification as amended up to June 30, 2010 – “Non-Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007”326 kb
23. Notification as amended up to June 30, 2010 – “Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998”