The annual NBFC compliance checklist defines the NBFC compliance due date and returns that every NBFC is required to file. The list is rendered according to the RBI guidelines and master directions.

Non-banking financial companies must comply with the compliance later mentioned in this blog, as per the Non-Banking Financial Company Returns (Reserve Bank) Instructions, 2016.

Based on Liabilities

• Deposit Accepting NBFCs;
• Non-Deposit Accepting NBFCs;
• Systematically Important (NBFC-ND-SI);
• Other Non-Deposit Holding Companies;

Based on Activities

• Infrastructure Finance Company (IFC)
• Investment and Credit Company (ICC)
• Systemically Important Core Investment Company (CIC)
• NBFC- Non-Operative Financial Holding Company (NOFHC)
• Mortgage Guarantee Companies
• NBFC-Factors
• NBFC- Microfinance Companies (MFIs)
• Infrastructure Debt Fund Non-Banking Financial Company (IDF-NBFC)

Below we have compiled an annual NBFC compliance checklist for every Non-Deposit and Deposit Company. See below:

S.No.	Particulars	Time Limit
	Annual Compliances
1.	Undiscovered March Return / NBS-7 Return	On or before 30th June
2.	Statutory Auditors Certificate of Income and Assets	On or before 30th June
3.	Details of companies with FDI or Foreign Funds	On or before 30th June
4.	Inspected return for March / NBS-7	Upon completion
5.	The audited file of annual balance and P&L Account	One month from the date of signoff
6.	Reconciliation of a Public Deposit Rejection	Before the commencement of the new Financial year
7.	Announcement of Auditors to Annual Audit Company	Annual basis
	Monthly Compliance
1.	Monthly Return	By the 7th of each month
2.	Upload Monthly Return	By the 7th of each month
	Periodical Compliances
1.	Appointment of Director (Appendix-III)	Within 30 days of appointment
2.	Resignation of Director that is DIR-12 + Challan report	That too in 30 days of appointment
3.	Receipt of any notice at the next Board Meeting and filing a certified copy with the RBI

According to Master Direction [1] – The NBFC-NDs-SI and NBFC-SI deposit company must file the following refunds as set out below:

Deposit NBFCs are required to submit the following refunds:

• NBS-1 Refunds: Every NBFC that receives or manages public funds must file an NBS-1 return quarterly. The purpose of filing this return is to take financial information such as Profit and Loss Account, Assets and Liabilities, Disclosures in sensitive areas, etc.
• NBS-2 Refunds: NBFC Receiving Public Funds is required to file a quarterly refund to Prudential Norms. The purpose after submitting this refund is to take into account compliance with a number of strategic principles such as the division of assets, Financial Sufficiency, NOF, Provision, etc.
• NBS-3 refunds: Also, it is a three-quarter refund where every NBFC who takes a deposit needs to apply every quarter. In addition, the purpose of introducing this return is to capture information regarding official investments in Liquid countries. In addition, statutory investments include Fixed Deposits in the Commercial Bank, Central or State Government Securities Schedules, etc.
• NBS-4 Recovery: The type of annual return of critical parameters. Reimbursement must be lodged by the rejected company holding public funds. Earlier it was installed on NBS-5. However, now NBS-5 is suspended as
• NBS-1 is introduced quarterly. The purpose of the NBS-4 application is to obtain the payment status of the rejected NBFCs that receive public funds.
• NBS-6 refunds: It is a monthly refund when the financial market is found by NBFC taking deposits with total assets equal to or in excess of Rs. 100 crores.
• Half-Yearly ALM Returns by the NBFC receives a public grant of more than Rs. 20 kg or bag size in excess of Rs. 100 crores.
• Audited Sheet and Audit Report of Non-Bank Financial Companies receive public funds. Branch Data Recovery: It is a quarterly refund in which every NBFC that receives or manages public funds needs to deposit it.

NBFC Non-deposit type is needed to send or submit the annual statement of capital funds, risk assets, ratio, etc. it can be submitted either digitally or physically. Moreover, capital adequacy, Liquidity, and other disclosure norms have been consolidated in Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) directions, 2007.

CRAR

Exposure to the reality sector both direct and indirect.

Maturity Patterns for assets and liabilities.

ALM Returns are allowed by NBFC Non-Deposit-SII to be submitted

ALM-1- Short Term Dynamic Liquidity Statement-Monthly Dynamic Liquidity Statement-

ALM-2- Short Term Statement, Systemic Liquidity- Half Annual Statement

ALM-3- Declaration of vulnerability to interest rates- Half a year

Moreover, if you have already obtained the NBFC License, as mentioned above, you are expected to comply with NBFC enforcement. In addition, the effects of non-compliance can lead to severe fines and even to the business being shut down.

However, if it is challenging for you to follow up on NBFC compliance, you can contact the Legalraasta consultant. We will take full care of your Non-Banking Financial Company’s compliance.

NBS-7: It is a quarterly statement of capital expenditure, estimated asset risk, risk assets, etc., for NBFC-ND-SI. Therefore, you need to install it quarterly.

A monthly return on the required financial parameters of the NBFCs-ND-SI should be submitted on a monthly basis.

ALM Returns: ALM (Asset-Liability Management) Returns refers to the number of returns that must be submitted by NBFCs-ND-SI from time to time as described below:

ALM Statement [NBS-ALM1] Changing Temporary: Monthly.

Property structure ALM Statement [NBS-ALM2]: Half Annual.

Interest Rate Sensitivity in ALM format – [Statement [NBS-ALM3]: Half Annual.

Assets Liability Mismatch Statement [ALM-YRLY]: Annually.

Branch Data Recovery: All NBFCs-ND-SI must submit branch information on a quarterly basis.

Quarterly return on substantial non-deposit financial parameters taken by NBFCs holding assets above Rs. 50 crores and higher but below Rs. 100 crores.
Non-deposit taking NBFCs with an asset size around Rs. 50 crores and Rs. 100 crores The basic details must be submitted periodically over the last three years, such as company name, address, NOF, and profit/loss.

In addition to the above compliances, there are several other compliances under the provisions of the Companies Act, 2013 that must be observed by all NBFCs PAN-India, which are as follows:

ADT-1, Auditor’s Appointment

Book and Account Maintenance

Holding the Regulatory Registers

Drawing up the financial statements

Statutory Meetings Convene

ITR (Income Tax Returns) Filings

AOC-4, Financial Statements Filing

MGT-7, Filing Annual Reports ROC (Registrar of Companies)

Compliance that applies to the whole NBFC regardless of the following functions:

• Completion of Annual Reports to RBI: All NBFC (Non-Banking Financial Institution) must submit their Annual Report within 15 days, from the date of the AGM (Annual General Meeting). Each financial institution must provide its Audited Financial Spreadsheet, as well as the Audited P&L (Profit and Loss Statement) submitted by the company to the Board Meeting. Company directors also need to submit a copy of the Board Report or Directors’ Report to Apex Bank.
• SAC or Certificate of Examiners: All NBFCs registered with PAN-India are required to collect a certificate from Legal Examiners. This certificate will serve as a declaration that the NBFC or Non-Banking Financial Company has performed the functions of the NBFC and is included under section 45-IA of the RBI, Act, 1934. Besides, the date on which this certificate is due is one month from the date of completion of the Balance Sheet. However, the time will not exceed December 31.
• Annual Refund: All NBFC receipts that receive or hold deposits must submit an annual refund containing details of the format set by Apex Bank of India.
• Change of Directors and Directors: If the NBFC decides to change its management or directors, then it is compulsory to notify the RBI within 1 month, from the date of the event. Besides, all non-bank financial institutions must submit a written statement, including the following details:
  1. Name and Official Appointment of its Chief Executive Officers.
  2. Name and residential address of company directors.
  3. Sample Signature of Chief Executive Officer authorized to sign on behalf of the Company.

Also, any changes or amendments made by Apex Bank to the guidelines provided above will be notified by the Reserve Bank of India within 1 month from the date of the change or amendment.

In addition to the above-mentioned compliance with RBI for NBFCs with PAN-India registration, there are some other regulations provided by RBI referred to in Chapter IV of the Master Director. These laws are referred to as the Prudential Regulations. Again, it is mandatory for any NBFC to comply with the regulations as follows:

• Leverage ratio: In every course of action, all NBFCs other than the NBFC-IFC (Infrastructure Finance Company) and the NBFC-MFI (Micro Finance Institution) must maintain a leverage ratio of up to 7.
• Accounting Investments: It is mandatory for the NBFCs’ BOD (Board of Directors) to frame and enforce investment policies for the company. The criteria for categorizing investments into long-term and current investments, for instance.
• Frame Policies for Call or Demand Loans: The BOD (Board of Directors) of a pertinent NBFC that plans to call or demand loans must frame a policy that will be adopted by the business.
• Asset classification: All NBFCs applicable to the RBI Master Directorate under Chapter IV shall identify their assets in classes as follows:
  
  1. Standard Property
  2. Assets Sub-Standard directors.
  3. Doubtful properties
  4. Assets Loss
• Standard asset provisioning: Each applicable NBFC is expected to include 0.25 percent of the total outstanding provisions on the standard assets.
• Multiple NBFCs: All NBFCs applicable to the RBI Master Path under Chapter IV will be aggregated jointly to verify the asset-size threshold of Rs 500 crores.
• Company balance sheet disclosures: Each related NBFC under Chapter IV of the RBI Master Guidance will have separate disclosure requirements for bad or questionable debts and investment depreciation.
• A loan taken against the company’s shares is prohibited: no BFCs applicable to the RBI Master Directorate under Chapter IV can either take over or lend credit against their own shares.