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Implementation of Compliance Function by NBFC-ML

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Eliza Bahrainwala, Executive| eliza@vinodkothari.com

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Our related resources on the topic:-

  1. Enhanced Corporate Governance and Compliance Function for larger NBFCs
  2. Compliance Risk Assessment

Our Resource Centre on SBR:

Resources on Scale Based Regulations

Base Layer NBFCs amenable to NSI or SI regulations?

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Rhea Shah, Executive | finserv@vinodkothari.com

Background

Prior to the implementation of the SBR Framework, NBFCs were classified into Systemically Important (SI) and Non-Systemically Important (NSI) on the basis of the overall risk involved in their operations and the economic importance of the operations that they undertake. NBFCs with asset size upto 500 crores were classified as NSI, and those with Rs. 500 crores and above, were classified as SI and are respectively governed by Master Direction – Non-Banking Financial Company – Non-Systemically Important Non-Deposit taking Company (Reserve Bank) Directions, 2016[1] (‘NSI Directions’) and Master Direction – Non-Banking Financial Company – Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016[2] (‘SI Directions’). Besides, there are certain other directions [e.g. Master Direction – Monitoring of Frauds in NBFCs (Reserve Bank) Directions, 2016[3]], which are applicable to NBFC-SIs and not NBFC-NSI. Even the return filing requirements differ for NBFC-SIs and NBFC-NSIs.

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