Various categories of Non-Banking Financial Companies or NBFCs

The following are the different types of Non-Banking Financial Companies (NBFCs) categorized based on their liabilities and activities:

NBFCs based on liabilities:

1. Deposit Accepting NBFCs: NBFCs that accept deposits from the public.

2. Systematically Important (NBFC-ND-SI): NBFCs that are considered significant to the financial system.

3. Non-Deposit Accepting NBFCs: NBFCs that do not accept deposits from the public.

4. Other Non-Deposit Holding Companies: NBFCs that are not involved in deposit-taking activities.

NBFCs based on activities:

1. Investment and Credit Company (ICC): NBFCs engaged in providing investment and credit services.

2. Infrastructure Finance Company (IFC): NBFCs focused on financing infrastructure projects.

3. Systemically Important Core Investment Company (CIC): NBFCs that are crucial to the core investment sector.

4. Mortgage Guarantee Companies: NBFCs providing mortgage guarantee services.

5. NBFC- Non-Operative Financial Holding Company (NOFHC): NBFCs that do not engage in active financial operations.

6. NBFC- Microfinance Companies (MFIs): NBFCs that specialize in microfinance services.

7. NBFC-Factors: NBFCs that engage in factoring activities, which involve purchasing accounts receivable from businesses.

8. Infrastructure Debt Fund Non-Banking Financial Company (IDF-NBFC): NBFCs that focus on providing long-term debt financing for infrastructure projects.

NBFCs' Yearly Compliance Requirement

The compliance process for Non-Banking Financial Companies (NBFCs) has become more efficient and strict. This is designed to reduce risk both for consumers and the government. NBFC-ND-SI companies must file annual documents and statements, including information about capital funds and risk asset ratio. In addition, new disclosure norms, such as capital adequacy and liquidity, have been added to the NBFC-ND Companies Prudential Norms Directions, 2007. Companies must maintain a capital adequacy of at least 15%.

The following are the specified time limits for various particulars:

1. Unaudited March Monthly Return/NBS7 must be submitted by June 30th.

2. Audited March Monthly Return should be submitted upon completion.

3. Statutory Auditors Certificate on Income and Assets must be submitted by June 30th.

4. Information about companies having FDI/Foreign Funds should be submitted by June 30th.

5. Resolution of Non-acceptance of Public Deposit must be made before the start of the new financial year.

6. Declaration of Auditors to Act as Auditors of the Company should be done on an annual basis.

7. Audited Annual Balance Sheet and P&L Account should be filed within one month from the date of signoff.

NBFC-NDs (Non-Deposit taking) are required to ensure timely compliance with the following monthly regulations:

1. Monthly Return: Submission by the 7th of every month.

2. Monthly Upload: Submission by the 7th of every month.

The periodic NBFC-ND (Non-Deposit taking) compliances are as follows:

The NBFC-ND (Non-Deposit taking) must comply with certain periodic requirements. These include

·         Appointing a director (as per Annexure-III) within 30 days of their appointment and

·         Uploading monthly returns within 30 days of their appointment

Various forms of returns

Deposit-taking NBFC Return Policy

NBS-1

We require quarterly returns to gather financial information, such as asset and liability components and the profit and loss account.

NBS-2

The purpose of this quarterly return is to obtain information on prudential norms, including asset classification, net owned funds, capital adequacy, provisioning, and more.

NBS-3

This quarterly return focuses on liquid assets and capturing information about statutory funds and investments in liquid states.

NBS-4

The annual return for critical parameters is filed to track the repayment status of rejected NBFCs that accept public deposits.

NBS-6

NBFC deposit-taking entities with total assets of Rs. 100 crore or more must submit this monthly return, which pertains to the capital market.

ALM Return

NBFCs holding public deposits exceeding Rs. 20 crore or with assets over Rs. 100 crore must file these returns on a half-yearly basis. NBFCs accepting public deposits must submit this return, which includes an audited balance sheet and authorized auditor's report. This return focuses on branch details.

NBFC-D (Deposit-Taking) Checklist: Annual Returns and Required Documents

Similarly, NBFCs that accept deposits, known as NBFC-D (Deposit-Taking) institutions, must submit several annual returns based on the deposits accepted by the company. Below are the returns required by non-deposit NBFCs:

NBS-7: A quarterly statement providing information on capital funds, risk assets ratio, risk-weighted assets, and more.

NBS-2: A monthly return reporting on a critical financial parameter of the company or NBFCs-ND-SI, specifically Asset Liability Management (ALM) Returns.

ALM Returns include:

1. A monthly statement of short-term dynamic liquidity in format NBS-ALM-1.

2. A half-yearly statement of structural liquidity in format NBS-ALM2.

3. A half-yearly statement of interest rate sensitivity in format NBS-ALM-3.

Branch Info Return: A quarterly return for NBFCs owning assets worth more than Rs. 50 crores but less than Rs. 100 crores, providing critical financial parameters such as the company name, Net Owned Fund, address, and profit and loss du. Ensure all required documents are submitted promptly to comply with regulations.