July 12, 2012


Compliance For NBFCs-Updated till July 2012


 Uniformity in Risk weight for assets covering PPP and post COD projects
Notification DNBS.PD.CC.No. 276 /03.02.089/2011-12 dated May 30,2012

Under
Particular
Frequency

Applicability
Para 1
Computing Capital adequacy:
For the purpose of computing capital adequacy,
Infrastructure Debt Fund (IDF)-NBFCs are permitted to assign a risk weight of 50 percent on bonds covering Public Private Partnerships (PPP) and post commercial operations date (COD) projects in existence over a year of commercial operation.
Directions
All Non Banking Financial Companies /
Residuary Non Banking Companies



 Guidelines on Fair Practices Code for NBFCs:
Notification DNBS.CC.PD.No.266 /03.10.01/2011-12 dated March 26, 2012

Under
Particular
Frequency

Applicability
Part A (i)
Applications for loans and their processing :
# All communications to the borrower shall be in the vernacular language or a language as understood by the borrower.
# Loan application forms should include necessary information which affects the interest of the borrower.
# The loan application form may indicate the documents required to be submitted with the application form.
# The NBFCs should devise a system of giving acknowledgement for receipt of all loan applications.
Directions
All NBFCs & MFIs
Part A (ii)
Loan appraisal and terms/conditions:
NBFCs shall mention the penal interest charged for late repayment in bold in the loan agreement.
NBFCs should provide all terms and conditions very clearyly in loan agreement. Not furnishing a copy of the loan agreement or enclosures quoted in the loan agreement is an unfair practice.
Directions
All NBFCs & MFIs
Part A (iii)
Disbursement of loans including changes in terms and conditions:
The NBFCs should give notice to the borrower any change in the terms and conditions including disbursement schedule, interest rates, service charges, prepayment charges etc.
NBFCs should also ensure that changes in interest rates and charges are effected only prospectively. A suitable condition in this regard should be incorporated in the loan agreement.
Directions






Directions
All NBFCs & MFIs
Part A (iii) C
Release all securities:
NBFCs should release all securities on repayment of all dues or on realisation of the outstanding amount of loan subject to any legitimate right or lien for any other claim

Directions
All NBFCs & MFIs
Part A (iv)A & B
General:
NBFCs should refrain from interference in the affairs of the borrower except as per loan agreement.
In case of receipt of request from the borrower for transfer of borrowal account, the consent or otherwise should be conveyed within 21 days from the date of receipt of request.

Directions
All NBFCs & MFIs
Part A (iv) C
Harassment of  borrowers:
In the matter of recovery of loans, the NBFCs should not resort to undue harassment viz. persistently bothering the borrowers at odd hours, use of muscle power for recovery of loans etc.
NBFCs shall ensure that the staff are adequately trained to deal with the customers in an appropriate manner
Directions
All NBFCs & MFIs
Part A (v)
Grievance redressal mechanism:
The Board of Directors of NBFCs should also lay down the appropriate grievance redressal mechanism within the organization to resolve disputes regarding harassment of borrowers.

Directions






All NBFCs & MFIs
Part A (v)
Periodic Review:
The Board of Directors should also provide for periodical review of the compliance of the Fair Practices Code and the functioning of the grievances redressal mechanism at various levels of management.
Directions
All NBFCs & MFIs
Part A (vii)
Interest Rates:
Boards of NBFCs are, therefore, advised to lay out appropriate internal principles and procedures in determining interest rates and processing and other charges.
The Board of each NBFC shall adopt an interest rate model taking into account relevant factors such as, cost of funds, margin and risk premium, etc and determine the rate of interest to be charged for loans and advances.

Directions
All NBFCs & MFIs
Part A (viii)
Availability on website:
The rates of interest and the approach for gradation of risks shall also be made available on the web-site of the companies or published in the relevant newspapers.

Directions
All NBFCs & MFIs
Part A (ix)
Repossession of vehicles financed by NBFCs
NBFCs must have a built in re-possession clause in the contract/loan agreement with the borrower which must be legally enforceable.
Directions
All NBFCs & MFIs


 Implementation of Section 51-A of UAPA, 1967 -Updates of the UNSCR 1267 (1999) /2989( 2011) Committee's Al Qaida Sanctions List
Notification DNBS(PD).CC. No 267 /03.10.42 /2011-12 dated March 26, 2012

Under
Particular
Frequency

Applicability
Para 2
Opening of accounts:
It should be ensured that name/s of the proposed customer does not on the list(“Al-Qaida Sanctions List”) circulated by RBI.

Once verification
All Non Banking Financial Companies /
Residuary Non Banking Companies
Para 2
Existing accounts:
All existing accounts should be scaned to ensure that no account is held by or linked to any of the entities or individuals included in the list.
Once verification
All Non Banking Financial Companies /
Residuary Non Banking Companies





 Assessment and Monitoring of Risk( Know Your Customer (KYC) norms/Anti-Money Laundering (AML) standards/Combating of Financing of Terrorism (CFT)/Obligation of banks under Prevention of Money Laundering Act (PMLA),
Notification DNBS(PD).CC. No 264/03.10.42/2011-12 dated March 21,2012.

Under
Particular
Frequency

Applicability
Para 2
Profile of Customers:
NBFCs are required to prepare a risk profile of each customer and apply enhanced due diligence measures on higher risk customers.
Directions
All Non Banking Financial Companies /
Residuary Non Banking Companies
Para 4
Identification & assessment of Risks:
NBFCs should take steps to identify and assess their Money Laundering (ML)/ Financing of Terrorism(FT) risk for customers, countries and geographical areas as also for products/ services/ transactions/delivery channels.
Directions
All Non Banking Financial Companies /
Residuary Non Banking Companies
Para 5
Guidance from Indian Banks' Association (IBA):
The IBA guidance provides an indicative list of high risk customers, products, services and geographies. NBFCs may use the same as guidance in their own risk assessment.
Directions
All Non Banking Financial Companies /
Residuary Non Banking Companies



 Lending Against Security of Single Product – Gold Jewellery
Notification  DNBS.CC.PD.No.265/03.10.01/2011-12 dated March 21,2012

Under
Particular
Frequency

Applicability
Para 2
Limitations on collateral :
Maintain a Loan-to-Value (LTV) ratio not exceeding 60 percent for loans granted against the collateral of gold jewellery.

Directions

All NBFCs
Para 2
Disclosure on balance sheets:
Disclose in their balance sheet the percentage of such loans to their total assets.

Directions & requirement for auditing
All NBFCs
Para 3
Maintaince of Tier I capital:
NBFCs primarily engaged in lending against gold jewellery (such loans comprising 50 percent or more of their financial assets) shall maintain a minimum Tier l capital of 12 percent by April 01, 2014.

Applicable from April 1,2014
All NBFCs
Para 4
Advance against bullion / primary gold and gold coins:
NBFCs should not grant any advance
Directions
All NBFCs




 Non- Reckoning Fixed Deposits with Banks as Financial Assets
 Notification DNBS (PD)CC.No.259 /03.02.59/2011-12 dated March 15 2012
Under
Particular
Frequency

Applicability
Para 3
Classification of Financial assets:
Investments in fixed deposits cannot be treated as financial assets and interest income on fixed deposits with banks cannot be treated as income from financial assets.
Bank deposits constitute near money and can be used only for temporary parking of idle funds, and/or in the above cases, till commencement of NBFI business.
Guidelines
(All Non Banking Financial Companies
(excluding Residuary Non Banking Companies)
Para 4
Commencement of Business:
NBFC which is in receipt of a certificate of registration  (CoR) from the Bank must necessarily commence NBFC business within six months of obtaining CoR, in case of default CoR stand withdrawn.
Once
(All Non Banking Financial Companies
(excluding Residuary Non Banking Companies)
Para 4
Change of ownership:
There can be no change in ownership of the NBFC prior to commencement of business and regularization of its CoR.
Directions
(All Non Banking Financial Companies
(excluding Residuary Non Banking Companies)


Monitoring of Frauds:
Notification DNBS.PD.CC. No. 256 /03.10.042 / 2011-12 dated March 02 2012

Under
Particular
Frequency

Applicability
Para 2
Classification & monitoring of Frauds:
Cases of frauds involving amount less than Rs. 25 lakhs shall be reported to the respective Regional Offices(ROs) of DNBS in jurisdiction of registered office.
In case of 25 lakhs and more; may be reported to Frauds Monitoring Cell, Reserve Bank of India, Central Office

When required

All Non-Deposit taking NBFCs with asset size of Rs.100 crore and above and Deposit taking NBFCs



Revised Capital Adequacy Framework for Off-Balance Sheet Items for NBFCs-Clarification
Notification DNBS.CC.PD.No.254/03.10.01/2011-12 dated December 30 2011
Under
Particular
Frequency

Applicability
Part E
Credit conversion factors for Credit Default Swaps(CDS):
NBFCs are only permitted to buy credit protection to hedge their credit risk on corporate bonds they hold. (Both current and permanent category)
 # Need to maintain capital charge for the corporate bond to the extent of 20% of the applicable capital charge.
Guidelines
 To all NBFC-MFIs excluding RNBCs


Non-Banking Financial Company -Micro Finance Institutions (Reserve Bank) Directions, 2011
Notification DNBS. PD.No.234 / CGM(US)-2011 dated December 02, 2011
Under
Particular
Frequency

Applicability
Part I Para 4 (A)
Entry Point Norm
Registration amount(minimum) for New NBFC-MFIs :
Net Owned Funds(NoF) =Rs 5 Crore;
Located in the North eastern region: Rs. 2 Crore
The existing NBFCs to be classified as NBFC-MFIs required to comply with this norm (w.e.f April 01, 2012.)
Once
 To all NBFC-MFIs
Part I Para 4 (B) (a)
Capital Requirement
# Capital adequacy ratio consisting of Tier I and Tier II Capital which shall not be less than 15 percent of its aggregate risk weighted assets.
#The total of Tier II Capital at any point of time, shall not exceed 100 percent of Tier I Capital.  
Ongoing
NBFC-MFI
Part I Para 4 (B) (b)
Asset Classification and Provisioning Norms:
Shall adopt the following norms (till then they shall follow the asset classification and provisioning norms as given in the Non-Banking Financial (Non-Deposit accepting or holding) Companies Prudential Norms (Reserve Bank) Directions, 2007).
Asset Classification Norms:
        i.            Standard asset means the asset in respect of which, no default in repayment of principal or payment of interest is perceived and which does not disclose any problem nor carry more than normal risk attached to the business;
      ii.            Nonperforming asset means an asset for which, interest/principal payment has remained overdue for a period of 90 days or more.
Provisioning Norms:
The aggregate loan provision to be maintained by NBFC-MFIs at any point of time shall not be less than  the higher of
a)  1% of the outstanding loan portfolio or
b) 50% of the aggregate loan instalments which are overdue for more than 90 days and less than 180 days and 100% of the aggregate loan installments which are overdue for 180 days or more. 
Applicable
w.e.f April 01, 2012 
NBFC-MFI
Para 4 (C) (a)
Pricing of Credit
        i.            All NBFC-MFIs shall maintain an aggregate margin cap of not more than 12%.
      ii.            Interest on individual loans will not exceed 26% per annum and calculated on a reducing balance basis.
    iii.            Processing charges shall not be more than 1 % of gross loan amount. Processing charges need not be included in the margin cap or the interest cap.
    iv.            NBFC-MFIs shall recover only the actual cost of insurance for group, or livestock, life, health for borrower and spouse.  Administrative charges where recovered, shall be as per IRDA guidelines.
Once
NBFC-MFI
Para 4 (C) (b) (I)
Fair Practices in Lending
I. Transparency in Interest Rates
a.       There shall be only three components in the pricing of the loan viz., the interest charge, the processing charge and the insurance premium (which includes the administrative charges in respect there of).
b.      There will be no penalty charged on delayed payment.
c.       NBFC-MFIs shall not collect any Security Deposit/ Margin from the borrower.
d.      There should be a standard form of loan agreement.
e.       Every NBFC-MFI should provide to the borrower a loan card reflecting 

(i) The effective rate of interest charged

(ii) all other terms and conditions attached to the loan 

(iii) information which adequately identifies the borrower and 

(iv) acknowledgements by the NBFC-MFI of all repayments including  installments received and the final discharge
(v) All entries in the Loan Card should be in the vernacular language.
f.       The effective rate of interest charged by the NBFC-MFI should be prominently displayed in all its offices and in the literature issued by it and on its website.
Once
NBFC-MFI
Para 4 (C) (b) (II)
Multiple-lending, Over-borrowing and Ghost-borrowers
a.       NBFC-MFIs can lend to individual borrowers who are not member of Joint Liability Group(JLG)/Self Help Group(SHG) or to borrowers that are members of JLG/SHG.
b.      a borrower cannot be a member of more than one SHG/JLG.
c.       not more than two NBFC-MFIs should lend to the same borrower.
d.      there must be a minimum period of moratorium between the grant of the loan and the due date of the  repayment of the first installment.  The moratorium shall not be less than the frequency of repayment.
e.       Recovery of loan given in violation of the regulations should be deferred till all prior existing loans are fully repaid.
f.       All sanctioning and disbursement of loans should be done only at a central location and more than one individual should be involved in this function. In addition, there should be close supervision of the disbursement function.
Once
NBFC-MFI
Para 4 (C) (b) (III)
·      NBFC-MFIs shall ensure that a Code of Conduct and systems are in place for recruitment, training and supervision of field staff.  The Code of Conduct should also incorporate the Guidelines on Fair Practices Code issued for NBFCs vide circular CC No.80 dated September 28, 2006 as amended from time to time. 
·      Recovery should normally be made only at a central designated place. Field staff shall be allowed to make recovery at the place of residence or work of the borrower only if borrower fails to appear at central designated place on 2 or more successive occasions.  
·       
Once
NBFC-MFI
Para 4 (C) (c)
Corporate Governance
The Master Circular issued for NBFCs on Corporate Governance vide CC No. 187 dated July 01, 2011 shall be applicable.

NBFC-MFI
Para 4 (C) (d)
 Improvement of Efficiency
NBFC-MFIs shall review their back office operations and make the necessary investments in Information Technology and systems to achieve better control, simplify procedures and reduce costs.

NBFC-MFI


Returns to be submitted by NBFCs
Notification DNBS.PD.CC. No.227/ 03.10.042/ 2011-12 dated July 1,2012

Part A
 Returns to be sun\bmitted by deposit taking NBFCs:
Details of Assets And Liabilities (NBS1)



Capital Funds, Risk Assets, Asset Classification
(NBS2)



Statutory Liquid Assets (NBS3)





Details of Public Deposits, Other Liabilities (NBS4)  



Components of Assets, Liabilities, Interest Rates, Cash Inflow/Outflow etc. (NBS5)




Details of Capital Market Exposure (NBS6)




Capital Funds, Risk Assets, Risk Weighted off-balance sheet items (Non-Funded Exposures), Asset Classification etc. (NBS7)



Structural Liquidity, Short-term dynamic liquidity, Interest Rate sensitivity etc. (ALM)






Sources and Application of Funds, Profit and Loss Account, Asset Classification, Bank's/FIs exposure on the company, Details of Capital Market Exposure, Foreign Sources etc.


Basic information like name of the company, address. NOF, profit / loss during the last three years






Name of the WOS/JV, Country and date of
incorporation, Date of NoC from DNBS, Business undertaken



Annually (
31st March
)

Half Yearly(
31st March / 30th Sept )

Quarterly
( 31st March/ 30th June/ 30th Sept/ 31st Dec)


Annually (
31st March
)

Quarterly
31st March/ 30th June/ 30th Sept/ 31st Dec

Monthly (At the end of each month)



Annually (
31st March
)


Half yearly
31st March/ 30th Sept






Monthly




Quarterly. (31st March/ 30th June/ 30th Sept/ 31st Dec)


Quarterly. (31st March/ 30th June/ 30th Sept/ 31st Dec)


Deposit taking NBFCs


Deposit taking NBFCs






























NBFCs-D having public deposit of Rs 20 crore  


All NBFCs





All NBFCs





All NBFCs




Future approach towards monitoring of frauds in NBFCs
Notification DNBS.PD.CC. No.229 / 03.10.042 / 2011-12 dated July 1,2011


Part 3.1
Reporting of Fraud to RBI:

Fraud reports should be submitted in all cases of fraud of Rs. 1 lakh and above.

Fraud reports should also be submitted in cases where central investigating agencies have initiated criminal proceedings suo moto or by the direction from RBI.

NBFCs may also report frauds perpetrated in their subsidiaries and affiliates/joint ventures. Such frauds should, however, not be included in the report on outstanding frauds.
When required

 All Deposit taking NBFCs (including RNBCs)
Part 4.1
Report on Frauds Outstanding:


NBFCs should submit a copy of the Quarterly Report on Frauds Outstanding in the format given in FMR – 2 to the Regional Office of the RBI, within 15 days of the end of the quarter to which it relates


NBFCs should furnish a certificate;

All individual fraud cases of Rs. 1 lakh and above- reported to the Reserve Bank in FMR – 1
Quarterly progress reports on frauds involving Rs. 1 lakh and above in the format given in FMR – 3


NBFCs should conduct an annual review of the frauds and place a note before the Board of Directors for information.


Quarterly










Quarterly






Annually



Reserve Bank of India Act, 1934

Section 45-IA
NBFC have to Register with RBI and shall not commence or carry on business as a non-banking financial institution without:
# Obtaining a certificate of registration RBI and maintaining NOF.

# NOF requirement for NBFC registered

Before 21/04/1999          = Rs.25 lacs
On or after 21/04/1999    = Rs.200 lacs
One time
All NBFC
Section 45-IC

Reserve Fund

Every NBFC shall create a reserve fund and transfer therein a sum not less than 20% of its net profit every year as disclosed in the profit and loss account and before any dividend is declared.
Yearly
All NBFC
Section 45-M

Duty of NBFC to furnish statements etc., required by Bank

It shall be the duty of every non-banking institution to furnish the statements, information or particulars called for, and to comply with any direction given to it,
When asked for
All NBFC

 

Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998

Notification No. DFC.118/DG(SPT)-98, Dated January 31, 1998
Part II Para 4
Minimum Credit Rating
No non-banking financial company having Net Owned Fund) of twenty five lakh of rupees and above shall accept public deposit unless it has obtained minimum investment grade or other specified credit rating for fixed deposits from any one of the approved credit rating agencies. and a copy is sent to the RBI along with return on prudential norms. 
At least once a year
All NBFCs
Part III Para 5
Information to be included in the Board's report
(1) In every report under  sub-section  (1)  of section 217 of the Companies Act, 1956 (1 of 1956), there shall be included in the case of a non-banking financial company, the following particulars or information, namely :-
(i) the total number of accounts of public deposit of the company which have not been claimed by the depositors or not paid by the company after the date on which the deposit became due for repayment; and
(ii) The total amounts due under such accounts remaining  unclaimed or unpaid beyond the dates referred to in clause (i) as aforesaid.
(2)  The said particulars or information shall be furnished with reference to the position as on the last day of the financial year to which the report relates and if the amounts remaining unclaimed or undisbursed as referred to in clause (ii) of the preceding sub-paragraph exceed in the aggregate a sum of rupees five lakhs, there shall also be included in the report a statement on the steps taken or proposed to be taken by the Board of Directors for the repayment of the amounts due to the depositors remaining unclaimed or undisbursed.
Once and should be updated from time to time


















All NBFCs
Part III Para 6
Safe custody of approved securities
Every non-banking financial company shall:
(i) open a Constituent's Subsidiary General Ledger (CSGL) account with a scheduled commercial bank, or the Stock Holding Corporation of India Ltd. (SHCIL) or a dematerialized account with a depository through a depository participant registered with the SEBI and keep the unencumbered approved securities required to be maintained by it in pursuance of Section 45-IB of the Reserve Bank of India Act, 1934 (2 of 1934) and the Notification No. DFC.121/ ED(G)-98 dated January 31, 1998 in such CSGL account or dematerialised account;
(ii) Designate one of the scheduled commercial banks, in the place where the registered office of the non-banking financial company is situated, as its designated banker and entrust, in physical form, to such bank or the SHCIL the unencumbered term deposits in any scheduled commercial bank maintained by it in pursuance of Notification No. DFC.121/ED(G)-98 dated January 31, 1998 and such unencumbered approved securities which have not been dematerialised;
and intimate the name and address of such scheduled commercial bank where it has opened its CSGL account or has held the securities in physical form, or the location of the SHCIL where it has opened its CSGL account or has held the securities in physical form or the depository (and the depository participant) where it has held its dematerialised account, in writing, to the Regional Office of the Reserve Bank of India under whose jurisdiction the registered office of the company is situated, as specified in Second Schedule.
Once
All NBFCs
Part III Para 7
Employees Security Deposit
A non-banking financial company receiving any amount in the ordinary course of its business as security deposit from any of its employees for due performance of his duties shall keep such amount in an account with a scheduled commercial bank or in a post office in the joint names of the employee and the company on the conditions that -
(1) it shall not withdraw the amount without the consent in writing of the employee; and
(2) the amount shall be repayable to the employee along with interest payable on such deposit account unless such amount or any part thereof is liable to be appropriated by the company for the failure on the part of the employee for due performance of his duties.
Once



All NBFCs
Part III Para 8(1)
Copies of balance sheet and accounts together with the Directors' report, auditors’ report,  notes on accounts and returns  to be furnished to the Reserve Bank
An audited balance sheet as on the last date of each financial year and an audited profit and loss account in respect of that year as passed by the company in general meeting together with a copy of the report of the Board of Directors laid before the company in such meeting in terms of section 217(1) of the Companies Act, 1956 (1 of 1956) also a copy of the report and the notes on accounts furnished by its Auditor.
Yearly within fifteen days of meeting
All NBFCs
accepting/holding public deposit
Part III Para 8(2)
Provision for submitting Auditor's Certificate
Shall furnish to the  RBI along with :
# a copy of the audited balance
# a copy of the Auditor’s report to the Board of Directors and 
# a certificate from its auditor, to the effect that the full amount of liabilities to the depositors of the company, including interest payable thereon, are properly reflected in the balance sheet, and that the company is in a position to meet the amount of such liabilities to the depositors.

All NBFCs
accepting/holding public deposit
Part III Para 8(3) and (4)
Returns to be submitted to the Reserve Bank  of  India
(3)  Shall submit to the RBI a  return furnishing the information specified in the First Schedule hereto, with reference to its financial position.
(4) Every non-banking financial company shall intimate to the Reserve Bank of India in case of any change of the following:
(i) the complete postal address, telephone number/s and fax number/s of the registered/corporate office;
(ii) the names and residential addresses of the directors of the company;
(iii) the names and the official designations of its  principal officers;
(iv)  the specimen signatures of the officers  authorised to sign on behalf of the company;  and
(v)  the names and office address of the auditors of the company.


As on the date specified in the said Schedule


Within one month of any change
All NBFCs
accepting/holding public deposit
Part III Para 8(5)
Balance sheet, returns, etc. to be submitted
to the Department of Non-Banking Supervision
Any balance sheets, returns or information or intimation or statement required to  be submitted or furnished to the Reserve Bank of India in pursuance of these directions shall be submitted  or furnished to the Regional Office of the Department of Non-Banking  Supervision of the Reserve Bank of India within whose jurisdiction the registered office of the company is situated, as specified in the Second Schedule hereto.

All NBFCs
Part III Para 9
Non-applicability of Direction to certain types of NBFC
a)    Insurance company
b)   Loan company, an investment company, an assets Finance company, not holding or accepting public deposits and pass a resolution to the effect within 30 days of the commencement of the financial year
c)    An investment company (investing only in group companies not less than 90% of its assets) and pass a resolution that has not accepted and would not accept Public Deposit and would not trade in such shares/ securities within 30 days of the commencement of the financial year.




Every year within 30 days from the commencement of financial year




All NBFC, which wants to claim exemptions

Non-Banking Financial Companies (non-Deposit Accepting or Holding) Companies Prudential Norms( Reserve Bank) Directions, 2007

Notification No. DNBS/(VL)2007, Dated 22.02.2007
Para 3, 4, 5, 6

Income recognition

Income from NPA shall be recognized only when actually realised. All unrealised income on NPA shall be reversed.
Ongoing
All NBFC

Income from investment

Dividend income on shares and units of Mutual Funds shall be taken on cash basis.
Income from Bonds and Debentures from Govt. Securities may be taken on accrual basis.
Income from securities (guaranteed by Central Govt. or State Govt.) may be taken on accrual basis.

Accounting Standards

Accounting standards and guidance notes issued by ICAI shall be followed

Accounting of investment

1. Board of Directors shall frame Investment Policy and implement the same.
2.  Classify the investments into Current and Long Term Investment
3.   No inter-class transfer on ad hoc basis
4.   Inter-class transfer, if warranted, shall be effected only on April 1 or October 1, with the approval of Board of Directors
5.   Investment shall be transferred scrip wise, from Current Investment to long term investment or vice versa at book value or market value, whichever is lower.
6.    Quoted Current Investment shall, for the purpose of valuation, shall be valued at cost or market value, whichever is lower.
7.  Unquoted equity shares in the nature of current investment shall be valued at cost or break-up value, whichever is lower.
8.   Long term Investment shall be valued in accordance with Accounting Standard issued by ICAI.

Para 7

Need for Policy on Demand / Call Loans

Policy for demand / call loan shall be framed
Ongoing
All NBFC giving loan etc.
Para 8, 9 and 10

Asset classification

Assets shall be classified as Standard, Sub-standard, Doubtful and Loss assets.
Ongoing
All NBFC

Provisioning requirements

Provision for assets (i.e. loans, advances or other credit facilities including bills purchased & discounted, Leased and hire purchased assets) shall be made
Ongoing

Disclosure in the Balance Sheet

Separately disclosure the provisions made as per para 9,  without netting them from the income or against the value of assets.
Yearly
Para 11

Constitution of Audit Committee

Company having assets of Rs.50 crore and above shall constitute an Audit Committee.
Ongoing
NBFC having assets of Rs.50 crore and above
Para 12 and 13

Accounting Year

Every NBFC shall prepare its B/S and P/L as on 31st March
Yearly
All NBFC

Schedule to the Balance Sheet

Every NBFC shall append to its B/S particulars in the format as set in schedule
Para 14

Transaction in Government Securities

NBFC shall hold investment in approved securities in a dematerialised form only.
Ongoing
All NBFC
Para 15

Submission of Auditors Certificate

- That the Company is engaged in the business of NBFI requiring it to hold a Certificate of Registration u/s 45IA of RBI Act indicating income and assets pattern of the company making it eligible for classification as Asset Finance, loan or Investment Company.
Latest by 30th June every year.
All NBFC
Para 16

Requirement as to Capital adequacy

Company shall maintain w.e.f. 01.04.2007, a minimum capital ratio   (consisting of Tier I and Tier II capital) which shall not be less than 10% of its weighted asset and the risk adjusted value of off-balance sheet items.
Ongoing.
Systemically important –ND taking NBFC
Para 17

Loan against NBFC’s own shares prohibited

No loan against own shares shall be given
Ongoing
All NBFC
Para 18

Concentration of credit / investment

Restriction has been specified (Lend or invest to single person 15% and group 25%) (Both lend and invest 25% and 40% respectively)

Ongoing
Systemically important –ND taking NBFC
Para 19

Information in regard to change of address, directors, auditors, Principal officer, etc.

Information to be submitted by every NBFC company within 30 days from the date of occurrence of any change
Within 30 days of occurrence of  any  change
All NBFC
Para 20

Norms relating to Infrastructure Loan

Restructuring of Infrastructure Loan.

All NBFC giving Infrastructure Loan

Under various Notification / Press release issued by Reserve Bank


Notification No. DNBS.192/DG(VL)-2007 dated 22.02.2007

Monthly return on important financial parameters on NBFC not accepting / holding public deposits and having assets size of Rs.100 crores and above
Monthly
Systemically important –ND taking NBFC

Notification No. DNBS(PD)CC. No. 93/03.05.002/2006-07 dated 27.04.2007

Annual Statement of capital funds, risk assets/exposures and risk etc.
Annual (30th June)
Form NBS-7
Systemically important –ND taking NBFC

Notification No. DNBS(PD)CC. No. 106/03.10.042/2005-06 dated 04.09.2007

Frauds – Future approach towards monitoring of frauds in NBFC.

-where the amount invlolved in the fraud is Rs. 25 lacs and above
-Quarterly Return on frauds of Rs. l lakh and above.




Form FMR-1
Form FMR-3

All NBFC

Circular No. DNBS(PD) CC No. 48/10.42/2004-05 dated 21.02.2005

NBFC is required to formulate a policy on  Know your customer(KYC) and Anti Money Laundering measures and put in place with the approval of Board of Directors within 3 months of the date of circular.

All NBFC

Circular No. DNBS(PD) CC No. 64/03.10.42/2005-06 dated 05.04.2006

-Appointment of Principal officer

-Maintenance of record under rule 3 of Money Laundering Act (PMLA), 2002

(cash/suspicious transactions)

-Report information relating to cash and suspicious transactions to the Director  Financial Intelligence Unit , New Delhi

All NBFC

Circular No. DNBS(PD) CC No. 80/03.10.42/2005-06 dated 28.09.2006

Fair Practice Code to be framed and approval of the same by the Board of Directors of the Company within one month from the date of circular.


All NBFC

Circular No. DNBS(PD) CC No. 95/03.05.002/2006-07 dated 24.05.2007

Board of Directors of NBFC to lay out appropriate internal principles and procedures in determining interest rates, processing and other charges on the guidelines indicated in fair practice code.

To ensure that excessive interest, beyond a certain level are not charged ( interest rates are not regulated by RBI)

All NBFC

Notification No. DNBS(PD)CC. No. 94/03.05.002/2006-07 dated 08.05.2007

Guidelines on Corporate Governance
1. Constitution of Audit Committee
2. Constitution of Nomination Committee
3. Constitution of Risk Management Committee

Assets Size of Rs. 50 crore and above Systemically important –ND taking NBFC

Information to be placed before the Board
at regular interval, prescribed by the Board:
-     progress made in putting in place a progressive risk management system, and risk management policy and strategy followed
-     conformity with corporate governance standards, viz, in the composition of various committees, their role and functions, periodicity of the meeting and compliance with coverage and review functions etc.



Systemically important –ND taking NBFC

Assets Size of Rs. 50 crore and above


Connected Lending
The NBFC should comply with the instructions on connected lending relationship, as detained in Annexure.
Note:  These directions are put on hold) o

Systemically important –ND taking NBFC




GUIDELINES FOR ASSET –LIABILITY MANAGEMENT(ALM)
Circular No. DNBS (DD) CC. No. 15/02.01/2000-01 dated 27/06/2001




Half-yearly Return for the period ended 31st March and 30th September, in three parts:
(i)           Statement of structural liquidity
(ii)         Statement of Short term dynamic liquidity
(iii)       Statement of Interest Rate Sensitivity
Within one month of ending of half-year
Systemically important –ND taking NBFC


A system of half yearly reporting is being put in place in
this regard and the first Asset Liability Management return may be submitted to
RBI by only those NBFCs which are holding public deposits within a month of close of the relevant half
year i.e., before 31 October 2002 and continue thereafter in similar manner. The half yearly returns
would comprise of three parts :
(i) Statement of structural liquidity in format ALM - Annexure - I;
(ii) Statement of short term dynamic liquidity in format ALM - Annexure - II; and
(iii) Statement of Interest Rate Sensitivity in format ALM - Annexure - III.
As on 30 September 2002


NBFCs holding public deposits are required to invest up to a prescribed percentage (15%
as on date) of their public deposits in approved securities in terms of liquid asset requirement of
Scetion 45-IB of the RBI Act, 1934



Alternatively, the NBFCs may also follow the concept of Trading Book which is as
follows:
i) The composition and volume are clearly defined;
ii) Maximum maturity/duration of the portfolio is restricted;
iii) The holding period not to exceed 90 days;
iv) Cut-loss limit prescribed;
v) Defeasance periods (product-wise) i.e. time taken to liquidate the position on the basis of
liquidity in the secondary market are prescribed;
"1 day to 30/31 days (One month)", Over one month and upto 2
months" and "Over two months and upto 3 months" buckets on the basis of the defeasance
periods.


Constitution of Asset Liability Management Committee (ALCO)

Systemically important –ND taking NBFC


Board of Directors should oversee the implementation of the system and review its functioning periodically.

Systemically important –ND taking NBFC



DNBS (PD) C.C.No.45 dated November 13, 2004



all such companies are required to submit a quarterly return in the format provided
Quarterly
NBFCs not accepting / holding public deposits and having assets size of Rs.500 crore and above

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