What is NBFC Compliance?

NBFC Compliance refers to the regulatory framework and periodic filing obligations applicable to Non-Banking Financial Companies (NBFCs) as governed by the Reserve Bank of India (RBI) and the Companies Act, 2013. NBFCs are financial entities engaged in lending, investment, leasing, hire purchase, or asset financing — but they do not hold a banking license.

To operate legally, NBFCs must follow strict regulatory, financial, and governance norms, including quarterly and annual filings, compliance with minimum Net Owned Funds (NOF), capital adequacy, risk management, KYC/AML guidelines, and periodic inspections.

NBFCs must also comply with ROC, Income Tax, and other statutory requirements. Maintaining full compliance is critical to safeguarding their license, reputation, and growth prospects.

✅ Benefits of NBFC Compliance
🎯 Written from the client’s perspective.

1️⃣ Safeguards your RBI license and ensures uninterrupted operations
2️⃣ Builds trust among investors, clients, and regulatory bodies
3️⃣ Avoids penalties, legal scrutiny, or suspension of business activities
4️⃣ Helps attract institutional investors and financial partnerships
5️⃣ Enables easier access to credit, capital markets, and FDI
6️⃣ Promotes ethical governance, accountability, and transparency
7️⃣ Enhances brand image and public perception

📑 Documents Required for NBFC Compliance
📂 Important documents with brief descriptions.

1️⃣ 📄 Certificate of Incorporation – ROC-issued document proving company formation
2️⃣ 💰 RBI Registration Certificate – Proof of NBFC licensing and registration
3️⃣ 📘 MOA & AOA – Governing charter with financial service objectives
4️⃣ 📊 Audited Financial Statements – Balance sheet, P&L, and auditor’s report
5️⃣ 📋 Board Resolutions – For approval of accounts and regulatory filings
6️⃣ 📅 Annual Return Forms – NBS-1, NBS-7, NBS-9, and returns on public funds

👤 Eligibility for NBFC Compliance
🧾 Who is required to comply?

All entities that are registered as NBFCs under the RBI Act, 1934 and perform financial activities such as:

• Lending, leasing, hire-purchase, or investment

• Asset financing or microfinance operations

• Infrastructure finance or housing finance

• NBFCs with Net Owned Funds of ₹2 Crores or more

• NBFCs accepting or not accepting public deposits

Even inactive or non-deposit-taking NBFCs (NBFC-ND) must follow certain compliance norms.

🔄 Process of NBFC Compliance
🔁 A step-by-step guide to compliance management.

1️⃣ Initial Review & Assessment – Evaluate current compliance status and business type
2️⃣ Audit & Financial Statement Preparation – Ensure statutory audit as per RBI norms
3️⃣ Filing of RBI Returns – Submit NBS-1, NBS-7, NBS-9, ALM, and others
4️⃣ ROC Filing – Submit AOC-4 and MGT-7 under Companies Act
5️⃣ Policy Review – Update KYC, AML, risk management, and grievance policies
6️⃣ Final Compliance Report – Comprehensive filing report with timelines and tracking

⏱️ Timeline for NBFC Compliance
⏳ Typical durations and key deadlines.

• Quarterly Returns: Within 15–30 days of each quarter’s end (NBS-1, NBS-7, ALM, etc.)

• Annual ROC Filings: AOC-4 (30 days from AGM), MGT-7 (60 days from AGM)

• Statutory Audit: Must be completed before annual returns are filed

• Compliance Duration: Typically 15–30 working days, based on data and audit readiness

Delays in RBI return filings attract penalties and may risk the cancellation of the NBFC license.

❓ Frequently Asked Questions (FAQs) about NBFC Compliance

1️⃣ Is compliance mandatory for non-deposit-taking NBFCs (NBFC-ND)?
Yes, NBFC-NDs must file quarterly and annual returns with RBI and ROC.

2️⃣ What happens if NBFC compliance is missed?
You may face monetary penalties, license suspension, or deregistration by RBI.

3️⃣ Which RBI forms are mandatory for NBFCs?
Key forms include NBS-1, NBS-7, NBS-9, ALM, and Statutory Auditor Certificate.

4️⃣ Are ROC filings also necessary for NBFCs?
Yes, NBFCs must comply with both RBI and ROC filing requirements annually.

5️⃣ Can an NBFC accept deposits from the public?
Only deposit-taking NBFCs (NBFC-D) registered and permitted by RBI can do so.

6️⃣ What are the capital requirements for NBFCs?
The minimum Net Owned Funds required is ₹2 crores, as per RBI guidelines.

7️⃣ Is KYC and AML compliance mandatory?
Yes, NBFCs must adopt and implement KYC/AML policies and report suspicious transactions.

8️⃣ How often is an NBFC audited?
NBFCs must undergo a statutory audit annually and may face RBI inspections.

9️⃣ Do you help in preparing RBI returns?
Yes, we assist in end-to-end preparation and filing of RBI-mandated returns.

🔟 Can an NBFC lose its license for non-compliance?
Yes, continuous non-compliance may lead to RBI revoking the NBFC license.