Compliances w.r.t. ND-NSI-Non Banking Financial Company · Compliances w.r.t. ND-NSI-Non Banking...
Transcript of Compliances w.r.t. ND-NSI-Non Banking Financial Company · Compliances w.r.t. ND-NSI-Non Banking...
Compliances w.r.t. ND-NSI-Non
Banking Financial Company
DATE: FEBRUARY 03, 2019 CS MANISH TIWARY
+91 98747 86912
Non Banking Financial Company-
Introduction
Section 45(I) of RBI Act, 1934, NBFC is
Financial Institution
which is a Company
a non-banking
institution which is a
company, and which
has as its principal
business
- the receiving of
deposits,
- or lending in any
manner
Financial
Company
Non-banking
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Financial Institution
as per RBI Act, 1934
NBFC which carries on its business in any of the following activities:
1. financing by loans or advances or otherwise;
2. acquisition of securities;
3. Hire-purchase business;
4. Insurance Business;
5. managing, conducting or supervising of chits or kuries;
6. collecting monies whether in cash or kind or disbursing monies in
any other way, by way of subscriptions or by sale of units, or other
instruments or in any other manner and awarding prizes or gifts, to persons from whom monies are collected
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Determination of principal business
(50-50 test)
Financial Assets>50%
of Total Assets
Income from Financial
Assets>50% of Gross Income
principal business of
NBFC
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Exemption from registration
Housing Finance Company
Micro Finance Company
Securitisation and Reconstruction Company
Nidhi Company
Chit Fund Company
Mortgage Guarantee Company
Merchant Banking Company
Insurance Company
Stock Exchange, Stock Brokers and Sub-brokers
Venture Capital Fund Company
Non- Systemically Important Core Investment Company
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Distribution of NBFCs in INDIA-
ND NSI
4768
2084
1061
280
240200
197 154
146
126
109
109
10336
25
18
NBFC Non-
Systemically
Important-ND
Kolkata
New Delhi
Mumbai
Chennai
Ahmedabad
Chandigarh
Jaipur
Lucknow
Hyderabad
Thiruvananthapuram
Bengaluru
Guwahati
Bhopal
Patna
Jammu
Bhubaneswar
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Distribution of NBFCs in INDIA-ND SI
140
122
52
24
23
19
9 7 4
3 2
1
1
NBFC Systemically Important-ND Hyderabad
Mumbai
New Delhi
Chennai
Kolkata
Bengaluru
Thiruvananthapuram
Ahmedabad
Chandigarh
Lucknow
Jaipur
Bhubaneswar
Guwahati
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Prudential Regulations
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9
Income RecognitionIncome from Loans Cash Basis
Income from Investments:
Dividends
- From Companies
- From Mutual Fund Units
Accrual Basis
Cash Basis
Bonds & Debentures Accrual Basis
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11Asset ClassificationCategory Particulars Provisioning
(on outstanding)
Standard Assets No default 0.25%
Sub-standard assets Upto 18 months NPA 10%
Doubtful assets More than 18 months sub-
standard
≥1 Year 20%
1-3 Year 30%
>3 Years 50%
Loss assets Identified as such by the
NBFC
100%
Non –Performing Asset (NPA): Loan Instalment and/or Interest due for more
than 6 months
Loan & Investment Policy
- Important Factors
Loan Policy
• Loan Appraisal
• Repayment terms
• Determination of Rate of interest
• Timeline for payment of interest
• Review of Loan performance
Investment Policy
• Current & non-current investment
• Inter-class transfer
•Grouping/ Classification of Quoted/ Unquoted investments
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KYC Policy- Key Elements
Customer Acceptance Policy;
Customer Identification Procedures;
Monitoring of Transactions;
Risk management
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Information w.r.t. change in
information
Postal Address
Telephone number and fax number
Directors
Principal Officer
Auditors
Authorised Signatory
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Governance Issue- Transfer of
Control
Change>
26%
Includes Progressive
change
Share
holding
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Change>
30%
Excluding Independent
Directors
Directors
NBFCs not to be
partners in partnership firms
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Companies in a group
Subsidiary – parent (defined in terms of AS 21),
Joint venture (defined in terms of AS 27),
Associate (defined in terms of AS 23),
Promoter-promotee (as provided in the SEBI SAST regulations) for
listed companies,
Related party (defined in terms of AS 18),
Common brand name, and
Investment in equity shares of 20% and above
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18
Capital Funds- Tier I INR(Lakhs)
1 Paid up Equity Capital 257.98
2 Pref. shares to be compulsorily converted into equity -
Free Reserves:
a. General Reserve -
b. Share Premium 3752.32
c. Capital Reserves -
d. Debenture Redemption Reserve -
e. Capital Redemption Reserve -
f. Credit Balance in P&L Account 382.89
g. Other free reserves (may be specified) -
4 Special Reserves 100.29
Total of 1 to 4 4493.48
5 Less: i. Accumulated balance of loss -
ii. Deferred Revenue Expenditure -
ii. Deferred Tax Assets (Net) -
iii. Other intangible Assets -
Owned Fund 4493.48
Investment in shares of
(i) Companies in the same group -
(ii) Subsidiaries -
(iii) Wholly Owned Subsidiaries -
(iv) Other NBFCs -
Book value of debentures, bonds outstanding loans and advances, bills purchased and is counted (including H.P. and lease finance) made to, and deposits with
(i) Companies in the same group
(ii) Subsidiaries -
(iii) Wholly Owned Subsidiaries/ Joint Ventures Abroad -
8 Total of 6 and 7 -
9 Amount in item 8 in excess of 10% of Owned Fund -
10 Net Owned Fund 4493.48
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6
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Fair Practice Code (FPC) Grievance Redressal Mechanism
Timely reports to Board;
Appointment of Grievance Redressal Officer
Appointment of Nodal Officer – Ombudsman Scheme
[NBFC Asset Size> 100 Cr]
Transparency in Interest Rate Policies
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Credit Information Companies
ExperianCrif Hi-Mark
EquifaxCibil
• Registration with all CICs
• Monthly data submission
Exemption: Investment
Companies without Customer
Interface
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Exemption from NBFC Regulations 21
NBFC-ND-NSI
- No Public Funds
- No customer interface
Prudential Issues; KYC Directions and FPC
- With Public Funds
- No customer interface
KYC Directions and FPC
- No Public Funds
- With customer interface
Prudential Issues
- With Public Funds
- With customer interface
Complete regulation shall apply
...contd
Public Fund:
• Funds raised through public
deposits either directly or indirectly;
• Inter corporate Deposits;
• Bank Finance;
• Funds raised by issue of
Commercial Papers, Debentures,
etc. (excluding instruments
compulsorily convertible into equity
within five years)
“customer interface” means
interaction between the NBFC and its
customers while carrying on its
business
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PMLA Guidelines Compliances
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CERSAI- CKYC Registry
Applicable on intermediaries like Stock Exchange, Depository
Participants, NBFCs
Registration Procedure
All NBFCs having customer interface
For identification, registration of customers
Unique CKYC registration number
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FIU-IND Registration
Registration of Company
on FIU-IND portal
- Register
- E-mail Ack
Appointment of Principal
Officer
Appointment of
Designated Director
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Reporting under FIU-IND
CTR Reporting STR Reporting
• All Cash Transactions> Rs. 10 Lakh
• Within 15 days of quarter end
• Suspicious Transactions
• Within 7 days of suspicion getting
confirmed
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Loan against quoted shares
Maintain Loan to Value Ratio of 50%
Quarterly Reporting to Stock Exchange information about pledged
shares including following information:
Name of Company
ISIN
No. of shares held
PAN
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Periodical Submission of data to RBI
Sl.
No.
Particulars Timeline
1. Non- acceptance of Public Deposit 30 Days from F.Y. end
2. Provisional NBFC Annual Return
NBS-8 (Asset size=100 - 500 Cr)
NBS-9 (Asset size< 100 Cr)
30 May
3. Statutory Auditor Certificate (SAC) 1 month from Balance Sheet
finalisation
4. Final NBFC Annual Return
NBS-8 (Asset size=100 - 500 Cr)
NBS-9 (Asset size< 100 Cr)
1 month from Balance Sheet
finalisation
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THANK YOU
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