Statutory Compliance Audit for NBFCs – An introduction


What is NBFC?

The Non-Banking Financial Companies (NBFC) is a heterogeneous group of financial institutions that perform vehicle finance, equipment lease finance, personal loans, consumer loans, housing loans, etc. It is regulated by the Reserve Bank of India (RBI).

Most NBFC’s are categorized as:

  1. NBFC-D
  2. NBFC-ND
  3. Core investment companies.

NBFC-D is NBFCs accepting deposits from banks whereas NBFC-ND is NBFCs not accepting/holding public deposits.

NBFC’s have to comply with the following laws or acts:

  • RBI Act
  • Companies Act
  • NBFC master circulars/notifications
  • Income Tax Act

And other regulations

Why is statutory compliance audit conducted in NBFC?

Generally, the audit is conducted to regulate the companies or firms to comply with the laws and make a nation with compliance assured.

These audits also ensure the financial statements of accounts given to the regulators and the public are accurate.

Auditing also helps to reduce corruption and other illegal activities that may or may not take place in a financial institution.

Some of the key findings for statutory compliance audit in NBFC:

  • Mandatory registration
  • Capital adequacy norms should be at least 15%
  • Opening branches/offices under minimum NOF of Rs.50cr and rating “AA”
  • Prohibition on lending against own shares
  • Income recognition and asset classification
  • Asset liability management
  • KYC guidelines
  • Submission of documents/ returns / RBI information

And much more…

To sum up, all financial institutions should comply with statutory compliance to mitigate legal risks and operates their business risk-free. However, if you are finding it difficult to follow the compliance laws than it is recommended to hire the best compliance service provider to meet all your compliance activities.

We, Aparajitha take care of all the industry specific compliances of NBFC and help them with last mile delivery and continuing being 100% compliant.

For more details, kindly visit us at or reach out via email

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