The Reserve Bank of India (RBI) on April 11, 2022 issued a Notification on “Compliance Function and Role of Chief Compliance Officer – NBFCs”. RBI had previously issued guidelines on Scale Based Regulations: A Revised Regulatory Framework for NBFCs in October of 2021.
Within it NBFCs who belonged to the upper layer (NBFC-UL) and middle layer (NBFC-ML) were required to have an independent Compliance Function and Chief Compliance Officer.This Notification, due to the above requirement, shall be applicable to only NBFC-ULs and NBFC-MLs. NBFCs who belong in the base layer (NBFC-BL) shall continue to be governed by the existing Master Direction – Non-Banking Financial Company – Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 or Master Direction – Non-Banking Financial Company – Non-Systemically Important Non-Deposit taking Company (Reserve Bank) Directions, 2016, as may be applicable.
This Notification broadly sets out that proper principles, standards and procedures for compliance function shall be put into place for NBFC-UL and NBFC-ML. NBFC-ULs and NBFC-MLs must put in place a board approved policy and compliance function based upon the Framework provided in the annex latest by April 1, 2023 and October 1, 2023, respectively.
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For further information, please contact:
Vineet Aneja, Partner, Clasis Law
vineet.aneja@clasislaw.com
