Audited balance sheet of each financial year and an audited profit and loss account in respect of that year as passed in the annual general meeting together with a copy of the report of the Board of Directors and a copy of the report and the notes on accounts furnished by its Auditors;<\/p>\n<\/li>\n

Statutory Quarterly Return on deposits – NBS 1;<\/p>\n<\/li>\n

Certificate from the Auditors that the company is in a position to repay the deposits as and when the claims arise;<\/p>\n<\/li>\n

Quarterly Return on prudential norms-NBS 2;<\/p>\n<\/li>\n

Quarterly Return on liquid assets-NBS 3;<\/p>\n<\/li>\n

Annual return of critical parameters by a rejected company holding public deposits \u2013 NBS4<\/p>\n<\/li>\n

Half-yearly ALM Returns by companies having public deposits of Rs. 20 crore and above or asset size of Rs. 100 crore and above irrespective of the size of deposits holding<\/p>\n<\/li>\n

Monthly return on exposure to capital market by deposit taking NBFC with total assets of Rs 100 crore and above\u2013NBS6; and<\/p>\n<\/li>\n

A copy of the Credit Rating obtained once a year<\/p>\n<\/li>\n<\/ol>\n

30. What are the documents or the compliance required to be submitted to the Reserve Bank of India by the NBFCs not accepting\/holding public deposits?<\/p>\n

The NBFCs having assets of Rs. 100 crore and above but not accepting public deposits are required to submit:<\/p>\n

(i) Quarterly statement of capital funds, risk weighted assets, risk asset ratio etc., for the company \u2013 NBS 7<\/p>\n

(ii) Monthly Return on Important Financial Parameters of the company<\/p>\n

(iii) Asset- Liability Management (ALM) returns:<\/p>\n

(iv) Statement of short term dynamic liquidity in format ALM [NBS-ALM1] -Monthly,<\/p>\n

(v) Statement of structural liquidity in format ALM [NBS-ALM2] Half Yearly<\/p>\n

(vi) Statement of Interest Rate Sensitivity in format ALM -[NBS-ALM3], Half yearly<\/p>\n

B. The non deposit taking NBFCs having assets of more than Rs.50 crore and above but less than Rs 100 crore are required to submit Quarterly return on important financial parameters of the company. Basic information like name of the company, address, NOF, profit \/ loss during the last three years has to be submitted quarterly by non-deposit taking NBFCs with asset size between Rs 50 crore and Rs 100 crore<\/p>\n

All companies not accepting public deposits have to pass a board resolution to the effect that they have neither accepted public deposit nor would accept any public deposit during the year.<\/p>\n

However, all the NBFCs (other than those exempted) are required to be registered with RBI and also make sure that they continue to be eligible to retain the Registration. Further, all NBFCs (including non-deposit taking) should submit a certificate from their Statutory Auditors every year to the effect that they continue to undertake the business of NBFI requiring holding of CoR under Section 45-IA of the RBI Act, 1934<\/p>\n

NBFCs are also required to furnish the information in respect of any change in the composition of its Board of Directors, address of the company and its Directors and the name\/s and official designations of its principal officers and the name and office address of its Auditors. With effect from April 1, 2007, non-deposit taking NBFCs with assets of Rs 100 crore and above were advised to maintain minimum CRAR of 10% and also comply with single\/group exposure norms. As on date, such NBFCs are required to maintain a minimum CRAR of 15%.<\/p>\n

31. The NBFCs have been made liable to pay interest on the overdue matured deposits if the company has not been able to repay the matured public deposits on receipt of a claim from the depositor. Please elaborate the provisions.<\/p>\n

As per Reserve Bank\u2019s Directions, overdue interest is payable to the depositors in case the company has delayed the repayment of matured deposits, and such interest is payable from the date of receipt of such claim by the company or the date of maturity of the deposit whichever is later, till the date of actual payment. If the depositor has lodged his claim after the date of maturity, the company would be liable to pay interest for the period from the date of claim till the date of repayment. For the period between the date of maturity and the date of claim it is the discretion of the company to pay interest.<\/p>\n

32. Can a company pre-pay its public deposits?<\/p>\n

An NBFC accepts deposits under a mutual contract with its depositors. In case a depositor requests for pre-mature payment, Reserve Bank of India has prescribed Regulations for such an eventuality in the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998 wherein it is specified that NBFCs cannot grant any loan against a public deposit or make premature repayment of a public deposit within a period of three months (lock-in period) from the date of its acceptance. However, in the event of death of a depositor, the company may, even within the lock-in period, repay the deposit at the request of the joint holders with survivor clause \/ nominee \/ legal heir only against submission of relevant proof, to the satisfaction of the company<\/p>\n

An NBFC, (which is not a problem company) subject to above provisions, may permit after the lock\u2013in period, premature repayment of a public deposit at its sole discretion, at the rate of interest prescribed by the Bank<\/p>\n

A problem NBFC is prohibited from making premature repayment of any deposits or granting any loan against public deposit\/deposits, as the case may be. The prohibition shall not, however, apply in the case of death of depositor or repayment of tiny deposits i.e. up to Rs. 10000\/- subject to lock in period of 3 months in the latter case.<\/p>\n

33. What is the liquid assets requirement for the deposit taking companies? Where are these assets kept? Do depositors have any claims on them?<\/p>\n

In terms of Section 45-IB of the RBI Act, 1934, the minimum level of liquid assets to be maintained by NBFCs is 15 per cent of public deposits outstanding as on the last working day of the second preceding quarter. Of the 15%, NBFCs are required to invest not less than ten percent in approved securities and the remaining 5% can be in unencumbered term deposits with any scheduled commercial bank. Thus, the liquid assets may consist of Government securities, Government guaranteed bonds and term deposits with any scheduled commercial bank.<\/p>\n

The investment in Government securities should be in dematerialised form which can be maintained in Constituents\u2019 Subsidiary General Ledger (CSGL) Account with a scheduled commercial bank (SCB) \/ Stock Holding Corporation of India Limited (SHICL). In case of Government guaranteed bonds the same may be kept in dematerialised form with SCB\/SHCIL or in a dematerialised account with depositories [National Securities Depository Ltd. (NSDL)\/Central Depository Services (India) Ltd. (CDSL)] through a depository participant registered with Securities & Exchange Board of India (SEBI). However in case there are Government bonds which are in physical form the same may be kept in safe custody of SCB\/SHCIL.<\/p>\n

NBFCs have been directed to maintain the mandated liquid asset securities in a dematerialised form with the entities stated above at a place where the registered office of the company is situated. However, if an NBFC intends to entrust the securities at a place other than the place at which its registered office is located, it may do so after obtaining the permission of RBI in writing. It may be noted that liquid assets in approved securities will have to be maintained in dematerialised form only.<\/p>\n

The liquid assets maintained as above are to be utilised for payment of claims of depositors. However, deposits being unsecured in nature, depositors do not have direct claim on liquid assets.<\/p>\n

34. Please tell us something about the companies which are NBFCs, but are exempted from registration?<\/p>\n

Housing Finance Companies, Merchant Banking Companies, Stock Exchanges, Companies engaged in the business of stock-broking\/sub-broking, Venture Capital Fund Companies, Nidhi Companies, Insurance companies and Chit Fund Companies are NBFCs but they have been exempted from the requirement of registration under Section 45-IA of the RBI Act, 1934 subject to certain conditions.<\/p>\n

Housing Finance Companies are regulated by National Housing Bank, Merchant Banker\/Venture Capital Fund Company\/stock-exchanges\/stock brokers\/sub-brokers are regulated by Securities and Exchange Board of India, and Insurance companies are regulated by Insurance Regulatory and Development Authority. Similarly, Chit Fund Companies are regulated by the respective State Governments and Nidhi Companies are regulated by Ministry of Corporate Affairs, Government of India.<\/p>\n

It may also be mentioned that Mortgage Guarantee Companies have been notified as Non-Banking Financial Companies under Section 45 I(f)(iii) of the RBI Act, 1934.<\/p>\n

35. There are some entities (not companies) which carry on activities like that of NBFCs. Are they allowed to take deposits? Who regulates them?<\/p>\n

Any person who is an individual or a firm or unincorporated association of individuals cannot accept deposits except by way of loan from relatives, if his\/its business wholly or partly includes loan, investment, hire-purchase or leasing activity or principal business is that of receiving of deposits under any scheme or arrangement or in any manner or lending in any manner.<\/p>\n

36. What is a Residuary Non-Banking Company (RNBC)? In what way it is different from other NBFCs?<\/p>\n

Residuary Non-Banking Company is a class of NBFC which is a company and has as its principal business the receiving of deposits, under any scheme or arrangement or in any other manner and not being Investment, Asset Financing, Loan Company. These companies are required to maintain investments as per directions of RBI, in addition to liquid assets. The functioning of these companies is different from those of NBFCs in terms of method of mobilization of deposits and requirement of deployment of depositors’ funds as per Directions. Besides, Prudential Norms Directions are applicable to these companies also.<\/p>\n

37. We understand that there is no ceiling on raising of deposits by RNBCs, then how safe is deposit with them?<\/p>\n

It is true that there is no ceiling on raising of deposits by RNBCs but every RNBC has to ensure that the amounts deposited and investments made by the company are not less than the aggregate amount of liabilities to the depositors<\/p>\n

To secure the interest of depositor, such companies are required to invest in a portfolio comprising of highly liquid and secure instruments viz. Central\/State Government securities, fixed deposits with scheduled commercial banks (SCB), Certificate of deposits of SCB\/FIs, units of Mutual Funds, etc. to the extent of 100 per cent of their deposit liability.<\/p>\n

38. Can RNBC forfeit deposit if deposit installments are not paid regularly or discontinued?<\/p>\n

No Residuary Non-Banking Company shall forfeit any amount deposited by the depositor, or any interest, premium, bonus or other advantage accrued thereon.<\/p>\n

39. Please tell us something on rate of interest payable by RNBCs on deposits and maturity period of deposits<\/p>\n

The amount payable by way of interest, premium, bonus or other advantage, by whatever name called by a RNBC in respect of deposits received shall not be less than the amount calculated at the rate of 5% (to be compounded annually) on the amount deposited in lump sum or at monthly or longer intervals; and at the rate of 3.5% (to be compounded annually) on the amount deposited under daily deposit scheme. Further, a RNBC can accept deposits for a minimum period of 12 months and maximum period of 84 months from the date of receipt of such deposit. They cannot accept deposits repayable on demand.<\/p>\n

40. There are some companies like Multi-Level Marketing companies, Chit funds etc. Do they come under the purview of RBI?<\/p>\n

No, Multi-Level Marketing companies, Direct Selling Companies, Online Selling Companies don\u2019t fall under the purview of RBI. Activities of these companies fall under the regulatory\/administrative domain of respective state government. A list of such companies and their regulators are as follows:<\/p>\n\n\n\n\n\n\n\n\n\n\n

\n Category of Companies<\/p>\n<\/td>\n	\n Regulator<\/p>\n<\/td>\n<\/tr>\n
\n Chit Funds<\/p>\n<\/td>\n	\n Respective State Governments<\/p>\n<\/td>\n<\/tr>\n
\n Insurance companies<\/p>\n<\/td>\n	\n IRDA<\/p>\n<\/td>\n<\/tr>\n
\n Housing Finance Companies<\/p>\n<\/td>\n	\n NHB<\/p>\n<\/td>\n<\/tr>\n
\n Venture Capital Fund \/<\/p>\n<\/td>\n	\n SEBI<\/p>\n<\/td>\n<\/tr>\n
\n Merchant Banking companies<\/p>\n<\/td>\n	\n SEBI<\/p>\n<\/td>\n<\/tr>\n
\n Stock broking companies<\/p>\n<\/td>\n	\n SEBI<\/p>\n<\/td>\n<\/tr>\n
\n Nidhi Companies<\/p>\n<\/td>\n	\n Ministry of corporate affairs, Government of India<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n 41. What are Unincorporated Bodies (UIBs)? Has RBI any role to play in curbing illegal deposit acceptance activities of UIBs?<\/p>\n Unincorporated bodies (UIBs) include an individual, a firm or an unincorporated association of individuals. In terms of provision of section 45S of RBI act, these entities are prohibited from accepting any deposit. The state government has to play a proactive role in arresting the illegal activities of such entities to protect interests of depositors\/investors.<\/p>\n UIBs do not come under the regulatory domain of RBI. Whenever RBI receives any complaints against UIBs, it immediately forwards the same to the state government police agencies (Economic Offences Wing (EOW)). The complainants are advised to lodge the complaints directly with the state government police authorities (EOW) so that appropriate action against the culprits is taken immediately and the process is hastened.<\/p>\n RBI on its part has taken various steps to curb activities of UIBs which includes spreading awareness through advertisements in leading newspapers to sensitise public, organize various investors awareness programmes in various districts of the country, keeps close liaison with the law enforcing agencies (Economic Offences Wing).<\/p>\n 42. Companies registered with MCA but not registered with RBI as NBFCs also sometimes default in repayment of deposit\/amounts invested with them? What is the recourse available to the investors in such an event? Does RBI have any role to play in such cases?<\/p>\n Companies registered with MCA but not required to be registered with RBI as NBFC are not under the regulatory domain of RBI. Whenever RBI receives any such complaints about the companies registered with MCA but not registered with RBI as NBFCs, it forwards the complaints to the Registrar of Companies (ROC) of the respective state for any action. The complainants are advised that the complaints relating to irregularities of such companies should be promptly lodged with ROC concerned for initiating corrective action. However, in case it comes to the knowledge of RBI those companies were required to be registered with the RBI, but have not done so and have accepted deposits as defined under RBI Act, such action as is deemed necessary under the provisions of the RBI Act will be taken.<\/p>\n 43. Whether the circular on Lending against shares dated August 21, 2014 is applicable to existing loans also?<\/p>\n The Circular is applicable from the date of the circular and therefore the Circular shall not apply on those transactions which have been entered into prior to the date of the Circular. However, the guidelines will be applicable in case of roll-over\/ renewal of loans. Guidelines will not apply to transactions where documents have been executed prior to the date of the circular and disbursement is pending. <\/p>\n 44. Will the circular be applicable on restructured accounts?<\/p>\n No. the Circular will not be applicable on restructured accounts<\/p>\n 45. Will the Circular be applicable on those loans where the primary security is not shares?<\/p>\n Loans which are against the collateral of multiple securities and it is specifically agreed to in the agreement that primary security would be something other than shares, LTV would not be applicable. However, reporting requirements shall remain. In cases where such differentiation is not made (thereby NBFCs can off-load shares at the instance of a default), LTV would be applicable.<\/p>\n 46. Whether LTV is to be computed at scrip level or at portfolio level?<\/p>\n LTV would be computed at portfolio level.<\/p>\n 47. Whether PoA\/ Non-Disposal undertaking structure by whatever name called is covered under the Circular?<\/p>\n Yes, the Circular would be applicable and the type of encumbrance created is immaterial.<\/p>\n Source : RBI<\/p>\n","protected":false},"excerpt":{"rendered":" 1. What is a Non-Banking Financial Company (NBFC)? A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956 engaged in the business of loans and advances, acquisition of shares\/stocks\/bonds\/debentures\/securities issued by Government or local authority or other marketable securities of a like nature, leasing, hire-purchase, insurance business, chit business but does … Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":"","_mi_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[10],"tags":[19],"class_list":["post-1882","post","type-post","status-publish","format-standard","hentry","category-banking","tag-nbfc"],"yoast_head":"\n