NBFC AUDIT

Question 1

NBFC Definition (45 I (f) of RBI Act,1997)

Answer 1

• Fin inst- company
• Non-banking inst - princi biz - receive deposits or lending
• other insti. as the bank may - approval of CG & notification in OG

Question 2

Identification of NBFC

Answer 2

Asset pattern : Fin assets > 50% of Total assets
Income pattern : Income from fin. assets > 50% of gross income

Total assets : netted off by Intangible Asset

Question 3

Registration & regulation of NBFC

Answer 3

• Obtain certificate of registration from RBI
• NOF > 25L/such other amt, not > 100 cr
• Bank - notify NOF for different categories of NBFC

Question 4

NOF Limits

Answer 4

• NBFC P2P , NBFC-AA , NBFC’S - no public funds & customer interface : NOF - 2 crores
• Certain categories - NOF - 10 cr ( phased manner - time limit upto 31/03/2027)

Question 5

NBFC Defn - amended in 1997 read with 45-I (c)

Answer 5

*reg. under Cos Act
*business of :
- loans & advances
- acquisition of
# shares/stocks/bonds/deb/securities - govt,local authority,
-leasing
-hire purchase
-insurance
-chits
* does not include :
- agri
-industrial activity
-pur/sale of goods ( not securities)
-services/sale/pur/conmstruction -immovable prop.
* Residuary non-banking company ( receive dep - lumpsum/instalments)

Question 6

Categories of NBFC

Answer 6

Terms of deposit acceptance :

• Deposit accepting NBFC
• Non deposit accepting NBFC
  * Systematically imp.(NBFC-NDSI)
  * Non-systematically imp.
  # based on kind of activities(eg : ICC,IFC,NOFHC etc)

Question 7

Companies exempt from RBI reg.

To avoid duality of regulation

Answer 7

Refer from text book

Question 8

Difference between Banks & NBFC

Answer 8

• X accept DD
• May accept term deposit
• Not a part of payment & settlement system - cannot issue cheques
• No DICGC facility
• no minimum exposure to priority sector

Question 9

Prudential Norms - Capital Requirements

Capital Adequacy Ratio

Answer 9

1. NBFC- maintain : min cap ratio (tier 1 +tier 2 cap) - X<15% OF:
   * risk weighted assets on-BS items
   * risk adjusted value of off-BS items
2. Applicable NBFCs- Tier 1 cap -@apot x< 10% (31/03/2017)
3. lending against gold(loans>50% of FA) - Tier 1 cap of min 12%
4. NBFC-NDSI : Net owned fund requirements