Section 2[(wa) of PMLA Act 2002, states that a “reporting entity” means a banking company, financial institution, intermediary, or a person carrying on a designated business or profession. The Ministry of Finance vide notification dated May 03, 2023 (‘Notification’) has widened the ambit of the term “Reporting Entity” as defined in Section 2(1)(wa), read with…
Banks in India play a crucial role in providing finance to Non-Banking Financial Companies (NBFCs). The approach, however, differs depending on whether the NBFC is registered with RBI or belongs to a category that **does not require RBI registration**. Bank Finance to RBI-Registered NBFCs Banks can extend need-based working capital and term loans to NBFCs…
The Fair Practices Code (FPC) is a mandatory framework issued by the Reserve Bank of India (RBI) for applicable Non-Banking Financial Companies (NBFCs). It sets ethical standards and ensures responsible lending, transparency, and customer protection throughout the borrower–lender relationship. Purpose and Objectives of the FPC The key goals of the Fair Practices Code are to:…
Effective corporate governance ensures that NBFCs comply with RBI regulations, manage risks efficiently, and protect the interests of all stakeholders—including shareholders, customers, and regulatory bodies. Robust governance fosters stakeholder confidence, reduces operational and financial risks, and sustains long-term growth in a competitive market. Key Governance Aspects RBI’s Corporate Governance Framework RBI has repeatedly strengthened governance…
The prudential guidelines for Non-Banking Financial Companies (NBFCs) issued by the Reserve Bank of India (RBI) form the backbone of financial discipline and risk management in the sector. These norms ensure NBFCs maintain sound practices in asset classification, provisioning, exposure management, liquidity, and governance, thereby safeguarding both creditors and the wider financial system. Under the…
Capital is the backbone of financial stability. Recognizing this, the Reserve Bank of India (RBI) has tightened and modernized the capital guidelines for Non-Banking Financial Companies (NBFCs) under its Scale-Based Regulatory (SBR) Framework. The norms focus on minimum Net Owned Fund (NOF), capital adequacy ratios, and progressive strengthening of buffers —all designed to make NBFCs…
The Reserve Bank of India (RBI) has steadily refined the nomenclature and regulatory norms for Non-Banking Financial Companies (NBFCs) through its Scale-Based Regulatory (SBR) Framework. This approach ensures that NBFCs are classified clearly, monitored effectively, and regulated proportionally to their size and risk. Let’s break it down. Nomenclature of NBFCs NBFCs are broadly categorized based…
The Reserve Bank of India (RBI) has rolled out a Revised Scale-Based Regulatory (SBR) Framework for NBFCs, marking a significant step in strengthening risk-based supervision and improving the resilience of non-banking financial companies (NBFCs) in India. This reform reshapes how NBFCs are governed, aligning oversight with their size, complexity, and systemic importance. Let’s break down…
The Prevention of Money Laundering Act, 2002 (PMLA) forms the core of the legal framework put in place by India to combat money laundering. PMLA and the Rules notified there under came into force with effect from July 1, 2005. Director, FIU-IND, and Director (Enforcement) have been conferred with exclusive and concurrent powers under relevant…
Prevention of Money Laundering Act, 2002(PMLA) is an Act enacted by the Government of India to prevent money-laundering and to provide for confiscation of property derived from money-laundering. PMLA and the Rules notified there under came into force with effect from July 1, 2005. The Rules 3, 4 and 5 of PMLA 2005 amended by…
