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
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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
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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
|
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
|
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
|
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
|
|
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
|
|
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
|
|
·
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
|
|
Corporate Governance
The Master Circular issued for NBFCs on
Corporate Governance vide CC No. 187 dated July 01, 2011 shall be applicable.
|
NBFC-MFI
|
||
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
|
||||
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
|
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
|
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
|
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
|
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
|
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
|
Returns to be submitted to
the Reserve Bank of
(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
(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
|
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
|
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
|
||||
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.
|
||||
Need for Policy on Demand /
Call Loans
Policy
for demand / call loan shall be framed
|
Ongoing
|
All
NBFC giving loan etc.
|
||
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
|
|||
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
|
||
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
|
||||
Transaction in Government
Securities
NBFC
shall hold investment in approved securities in a dematerialised form only.
|
Ongoing
|
All
NBFC
|
||
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
|
||
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
|
||
Loan against NBFC’s own shares
prohibited
No
loan against own shares shall be given
|
Ongoing
|
All
NBFC
|
||
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
|
||
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
|
||
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 ,
|
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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