Understanding the RBI's CFSS Mandate for NBFCs

Updated On : June 2023

What is CFSS?

CFSS, short for Core Financial Services Solution, is a regulatory requirement issued by the Reserve Bank of India (RBI) for Non-banking Finance Companies (NBFCs) in India. The mandate stipulates that NBFCs operating with 10 or more branches must implement the Core Banking Solution. This means that these NBFCs are obligated to adopt a centralized system to manage their financial services.

Furthermore, NBFCs with 10 or more fixed point service delivery units in the upper and middle layers are required to implement CFSS by September 30, 2025. However, for NBFCs with fewer than 10 fixed point service delivery units, the adoption of CFSS is not mandatory. Nevertheless, it is advisable for them to consider implementing CFSS as it can contribute to the smooth functioning of their business operations.

CFSS is a comprehensive platform that automates the complete operational process of NBFCs, ensuring a smooth and hassle-free customer experience. By integrating NBFC functions into a centralised database, CFSS provides anytime, anywhere services and accounting records. Additionally, the platform includes management information systems (MIS) for efficient regulatory reporting.

What is the purpose of the RBI's mandate for the implementation of a CFSS by NBFCs?

The RBI introduced CFSS in order to exert more automation-based control over NBFCs. The primary objective of the RBI is to facilitate the automation of NBFC operations, aligning them with the growing customer demands. By embracing CFSS solution, NBFCs can enhance transparency for depositors and enable effective business monitoring. It is similar to the core banking solution used by the banks.

How Nelito can help NBFCs with its CFSS?

Nelito’s Fincraft^TM Integrated Lending Management Software (ILMS) for NBFCs is an end-to-end lending management software tailored to NBFC operations on the ground through integrated LOS, LMS, Collection, and Recovery modules. ILMS covers both operational and strategic requirements, resulting in enhanced customer service through technology with a human touch, which is perfectly aligned with CFSS.

The modules offered are:

• Lead Generation and Loan Origination System (LOS): Seamless customer onboarding process with Omni Channel lead generation, which automated the activities from lead initiation, categorization, lead qualification with credit bureau integration, lead bucketing, and customer onboarding for individuals or groups.
• Loan Management System (LMS): Provides end-to-end loan management functionality for different types of loan products like retail, SME/MSME, group lending, and individual lending and advances. Our LMS offers a configurable product rule engine consisting of limit frame work, collateral setup, recovery appropriation policy, interest structure, etc.
• Collection and Recovery System: This system helps track and manage delinquent customers and helps minimise delinquencies with tighter supervision. It also provides automatic proactive actions for soft calling and hard bucket collection stages.
• Mobility first approach: This application, which is helping the field force increase market penetration and customer-facing applications, enables the customer to access it anytime, anywhere.
• Business Analytics: With the dashboards and reports, it helps NBFCs with better decision-making, analysis, and timely submission of reports.

Benefits of using our solution:

• 100% mobile and web-based technology helps increase viability.
• Cut-downs in many of the manual systems and the overall lending process led to considerable cost savings.
• The real-time accounting entries have improved cash management.
• The mobility solution has enabled the field force, resulting in higher loan disbursements and higher market penetration. Field agents have increased the collections with greater profitability.

To more about our CFSS solution write us at marketing@nelito.com or visit our website https://www.nelito.com/