Inquisitive Mind

Non-Banking Financial Companies (NBFCs) are required to obtain prior approvals from Reserve Bank of India (RBI) or intimate / report to RBI various events. This article lists out some of such important events where prior approvals or intimations / reporting is required for Base Layer NBFCs (NBFC-BL). Events requiring prior approval from RBI  Master Direction – Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023 dated October 19, 2023 Para 30 – NBFCs shall prepare its balance sheet and profit and loss account as on March 31 every year. Whenever an NBFC intends to extend the date of its balance sheet as per provisions of the Companies Act, 2013, it shall take prior approval of RBI before approaching the Registrar of Companies for this purpose. Even in cases where RBI and the Registrar of Companies grant extension of time, the NBFC shall furnish to RBI a proforma balance sheet (unaudited) as on March 31 of the year and the statutory returns ...

Non-Banking Financial Companies (NBFCs) are required to make various appointments for efficient operations. This article lists out some of the important appointments to be made by the Base Layer NBFCs (NBFC-BL). Key Managerial Personnel (KMP) Companies Act, 2013 Section 203(1) – Every company belonging to such classes of companies as may be prescribed shall have the following whole-time KMP – Managing director, or Chief Executive Officer or manager and in their absence, a whole-time director Company secretary Chief Financial Officer Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 Rule 8 – Every listed company and every other public company having a paid-up share capital of ₹10 crore or more shall have whole-time KMP. Rule 8A – Every private company with a paid up share capital of ₹10 crore or more shall have a whole-time company secretary. Principal Nodal Officer / Grievance Redressal Officer Reserve Bank - Integrated Ombudsman Scheme, 2021 dated November 1...

Non-Banking Financial Companies (NBFCs) are required to make various disclosures. This article lists out some of the important disclosures to be made by Base Layer NBFCs (NBFC-BL) in its financial statements, on its website and in its branches. Disclosures to be made in financial statements / annual reports Master Direction – Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023 dated October 19, 2023 Para 37.4.4 – In case of gold loans, NBFCs shall disclose in their annual reports the details of the auctions conducted during the financial year including the number of loan accounts, outstanding amounts, value fetched and whether any of its sister concerns participated in the auction. Para 40 – NBFCs shall disclose in their annual financial statement, aggregate amount of loans and advances sanctioned to directors, senior officers and relatives of directors and to entities where directors or their relatives have major shareholding (as per templat...

Non-Banking Financial Companies (NBFCs) are required to formulate various policies for effective corporate governance and operations. This article lists out some of the important policies to be formulated by the Base Layer NBFCs (NBFC-BL). Business Model Master Direction – Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023 dated October 19, 2023 Para 1.1 of Annex II – In view of the criticality of the nature of the business model in determining the classification of financial assets and restrictions on subsequent reclassification, NBFCs are advised to put in place Board approved policies that clearly articulate and document their business models and portfolios. Para 1.2 of Annex II – NBFCs shall frame their policy for sales out of amortised cost business model portfolios. Expected Credit Losses (ECL) Policy Master Direction – Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023 dated October 19, 202...