RBI ROLE: NBFC REGISTRATION WITH RBI

Non-Banking Financial Companies (NBFCs) serve an important in expanding financial inclusion, competitive pressure, and diversifying the financial industry. In times of financial difficulty, they are increasingly seen as a supplement to the banking system, competent in absorbing shocks and distributing risks. The implementation of differing degrees of rules to the activities of banks and NBFCs, and even across different types of NBFCs, has resulted in several complications. As a result, the Reserve Bank of India established an Internal Group to investigate problems such as fair playing field, regulatory uniformity, and financial speculation in the banking industry.

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Current Status: Prudential Norms
In January 1998, the Rbi established a new regulatory system incorporating the prescribed prudential requirements for deposit-taking NBFCs in order to guarantee that these NBFCs operate on healthy and productive lines. Supervisory and regulatory emphasis was concentrated on 'deposit taking NBFCs' (NBFCs – D) in order for the Reserve Bank to fulfil its duties to protect depositors' interests. Certain bank-like prudential restrictions apply to NBFCs - D in areas such as income recognition, asset categorization, and provisioning; capital adequacy; prudential exposure limitations, and accounting/disclosure standards. The 'non-deposit taking NBFCs' (NBFCs – ND) are, on the other hand, subject to minimum regulatory oversight.
NBFC registration with RBI is of utmost crucial to gain authorisation to work as an NBFC in India. If you are seeking NBFC registration in India, kindly reach out to MUDS Mangement, India’s leading financial and legal consultancy for more information.