Compliances :- Non-Banking Financial Companies (NBFC)
Non-Banking Financial Companies (NBFCs) in India are financial institutions that provide various financial services, such as loans, advances, investments, and other credit facilities, but they do not hold a banking license. NBFCs are regulated by the Reserve Bank of India (RBI) and are subject to certain yearly compliances to ensure regulatory compliance and financial soundness. The yearly compliances for NBFCs in India include:
Annual Return (Form NBS-9): NBFCs are required to submit an annual return in Form NBS-9 to the RBI. The annual return contains information about the NBFC's financial position, capital adequacy, asset-liability mismatch, and other key financial indicators. The Form NBS-9 must be submitted within 90 days from the end of the financial year, i.e., by June 30 each year.
Financial Statements (Form NBS-10): NBFCs are required to prepare and submit financial statements in Form NBS-10 to the RBI. The financial statements include the NBFC's balance sheet, profit and loss account, and other relevant financial disclosures. Form NBS-10 must be submitted within 90 days from the end of the financial year, i.e., by June 30 each year.
Statutory Audit: Every NBFC is required to undergo a statutory audit of its financial statements by a qualified chartered accountant. The auditor's report must be attached to the financial statements while filing Form NBS-10.
Prudential Norms: NBFCs are required to comply with various prudential norms prescribed by the RBI, such as capital adequacy requirements, exposure norms, and provisioning norms. These norms are essential for maintaining financial stability and solvency.
Asset-Liability Management (ALM) System: NBFCs are required to have a robust ALM system in place to manage and monitor their assets and liabilities and maintain a reasonable liquidity position.
Submission of Quarterly Returns: NBFCs are required to submit quarterly returns to the RBI, providing information about their financial performance, loan portfolio, and other relevant details.
KYC and AML Compliance: NBFCs are required to follow KYC (Know Your Customer) and AML (Anti-Money Laundering) norms to prevent money laundering and terrorist financing activities.
Corporate Governance: NBFCs are required to adhere to good corporate governance practices and comply with the relevant provisions of the Companies Act and RBI guidelines.
Tax Compliances: NBFCs are required to file income tax returns and comply with all tax-related obligations.
It is crucial for NBFCs to adhere to these yearly compliance requirements to avoid penalties and maintain their regulatory status with the RBI.