RBI Compliance Returns for NBFCs in India

Updated On : June 2024

NBFCs (Non-Banking Financial Companies) are financial institutions regulated and authorized by the Reserve Bank of India. These entities specialize in providing loans and advances, acquiring shares, stocks, bonds, debentures, and securities issued by governments, local authorities, or other marketable entities. Additionally, they engage in leasing, hire-purchase arrangements, insurance services, and operate chit funds.

Compliance filings are an integral part of the regulatory framework for NBFCs. This article aims to give readers an overview of the different types of compliance filing required for NBFCs. Each of these submission types is explained, with particular emphasis on processes and the consequences of making such filings for transparency and smooth functioning of NBFCs in the financial ecosystem.

Need of Compliance for NBFCs

NBFCs must comply with a set of rules and file returns as a bank does in most cases. Once it meets the requirements for running efficiently, then these financial institutions must follow them in order to be able to operate. Failure to do so can have serious consequences, ranging from heavy fines or even having their certificate of registration cancelled.

According to the Master Direction- Non-Banking Financial Companies Returns (Reserve Bank) Directions, 2016, NBFCs are required to submit a number of returns issued by the Reserve Bank of India, as these instructions lay down a safe practice ground work for the proper operation of these financial entities.

Benefits of Compliance for NBFCs

Let's take a closer look at the advantages of good compliance management in NBFCs:

• Reduced Legal Issues: Compliance with regulations helps NBFCs stay away from legal problems such as fines, or having their licenses revoked.
• Better Reputation: Because companies adhere to regulatory standards continually, they possess more credibility in the eyes of customers, investors and other stakeholders. By comparison with the market, their reputation is simply better.
• Greater Operational Efficiency: With a strong compliance system, inefficiencies can be identified and corrected, leading to improved productivity as well profits in turn.
• Enhanced Risk Management: Compliance management enables NBFCs to anticipate risks and avoid loss, as a result, it means that they don't get into financial trouble or suffer damage to their prestige and image.
• Higher Customer Confidence: Customers are more likely to trust compliant NBFCs in the service they provide. This amounts to increased customer loyalty and retention, which in turn leads straight in the direction of multiplying profits.

Types of NBFCs Compliance Filings

Form	NBFC Type	Category
DNBS01- Important Financial Parameters - Quarterly@	The return captures financial details, viz. components of Assets and Liabilities, Profit and Loss account, Exposure to sensitive sectors etc. for NBFC-D and NBFC-NDSI.	NBFCs-Deposit Taking, NBFC – NDSIs (having Asset Size> ₹500 crore), Multiple NBFCs in the same group whose asset size together is of ₹500 crore & above, NBFC-Factors and NBFC-NOFHCs
DNBS02-Important Financial Parameters - Annual@	The return captures financials details like components of assets and liabilities as well as compliance with various prudential norms for non-deposit taking non-NDSI NBFCs.	Non-deposit taking non-NDSI
DNBS03-Important Prudential Parameters@	The return captures compliance with various prudential norms, e.g. Capital Adequacy, Asset Classification, Provisioning, NOF etc. for NBFC-Deposit taking and NBFC-NDSI.	NBFCs-Deposit Taking, NBFC – NDSIs (having Asset Size > ₹500 crore), Multiple NBFCs in the same group whose asset size together is of ₹500 crore & above, NBFC-Factors and NBFC-NOFHCs
DNBS04A- Short Term Dynamic Liquidity (STDL) - Quarterly@	To capture the details of mismatch in projected future cash inflows and outflows based on the busniess projections.	NBFCs-Deposit Taking, NBFC – NDSIs (having Asset Size > ₹500 crore), Multiple NBFCs in the same group whose asset size together is of ₹500 crore & above, NBFC-Factors & NBFC- Core Investment Companies (CICs) & NBFC-NDs having asset size between ₹100 crore and ₹500 crore. Return not to be filed by NBFC-NOFHCs
DNBS04B-Structural Liquidity & Interest Rate Sensitivity - Monthly@	To capture (i) The details of mismatch in projected future cash inflows and outflows based on the maturity pattern of assets and liabilities at the end of the reporting period for NBFCs-NDSI; (ii) The details of interest rate risk.	NBFCs-Deposit Taking, NBFC – NDSIs (having Asset Size > ₹500 crore), Multiple NBFCs in the same group whose asset size together is of ₹500 crore & above, NBFC-Factors & NBFC- Core Investment Companies (CICs) & NBFC-NDs having asset size between ₹100 crore and ₹500 crore. Return not to be filed by NBFC-NOFHCs
DNBS05 - Return for CoR Rejected companies@	To capture details in respect of NBFCs which accepted public deposits and whose CoR was rejected	NBFCs whose CoR has been rejected by the Reserve Bank and were accepting/holding public deposits on the date of application for Certificate of Registration
DNBS06 - Important Financial & Prudential Parameters – RNBCs	The return captures financials details like components of assets and liabilities as well as compliance with various prudential norms for RNBCs.	RNBCs
DNBS07 - ARCs Important Financial Parameters@	To capture financial parameters and various operational details e.g. assets (NPA) acquired, acquisition cost, their recovery status etc. for ARCs.	ARCs
DNBS08-CRILC Main Return- Monthly	To capture credit information on aggregate exposure of ₹5 Crore and above to a single borrower.	NBFCs-Deposit Taking, NBFC – NDSIs (having Asset Size > ₹500 crore), Multiple NBFCs in the same group whose asset size together is of ₹500 crore & above, NBFC-Factors & NBFC CIC (Core Investment companies). Not to be filed by NBFC-NOFHCs
DNBS09-CRILC RDB	All NBFCs-D, NBFCs-NDSI and NBFCs-Factors having aggregate exposure of ₹5 Crore and above to a single borrower reported in SMA-0 for the week	All NBFCs-D, NBFCs-NDSI and NBFCs-Factors having aggregate exposure of ₹5 Crore and above to a single borrower reported in default for the week
DNBS10-Statutory Auditor Certificate (SAC) Return	To ensure continued regulatory compliance for all NBFCs.	All NBFCs and ARCs
DNBS11-CICs - Important Financial Parameters@	The return captures financial details, viz. components of Assets and Liabilities, Profit and Loss account, Exposure to sensitive sectors etc. for CIC-ND-Sis.	NBFC- Core Investment Companies (CICs)
DNBS12-CICs - Important Prudential Parameters@	The return captures compliance with various prudential norms, e.g. Capital Adequacy, Asset Classification, Provisioning, NOF etc. for CIC-ND-Sis.	NBFC- Core Investment Companies (CICs)
DNBS13-Overseas Investment Details@	To capture details of overseas investment for all NBFCs having overseas investment.	All NBFCs and ARCs
DNBS14- P2Ps- Important Financial & Prudential Parameters@	The return captures financials details like components of assets and liabilities as well as compliance with various prudential norms for NBFCs-P2P.	NBFC-P2P Category

Conclusion

For NBFCs, compliance management is effective if it is implemented well. It is not just a business necessity but an advantage to NBFCs strategic operations as it reduces legal risks, helps operational efficiency and reputation enhancement. Customer confidence, on the other hand is enhanced benefitting the NBFCs business standing. With the ever-evolving regulatory landscape, staying compliant can be a complex and labour-intensive process for NBFCs, but if done right can help them remain efficient and competitive in the long run.

For NBFCs in India, Neltio Systems’ Regulatory Reporting software offers a comprehensive Statutory & Regulatory DNBS Automated Data Flow (ADF) Reporting Solution. With features like Integrated XBRL reporting, timely submissions, and zero % rejection by regulators, our solution streamlines compliance management. Our FinCraft^TM solution ensures accurate data submission to the RBI directly from core systems, facilitating timely regulatory reporting software for NBFCs.

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