Obligations of Banks and Financial Institutions in Combating Money Laundering
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…
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Bank Finance to NBFCs: Registered vs. Not Requiring RBI Registration
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…
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Fair Practices Code (FPC) for NBFCs in India
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:…
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Significance of Corporate Governance in NBFCs
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…
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Prudential Guidelines for NBFCs under RBI’s SBR Framework
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 Guidelines for NBFCs under RBI’s Scale-Based Framework
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…
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