What changed
RBI issued a master circular compiling all miscellaneous directions/instructions for NBFCs issued up to June 30, 2010, that were not covered in other master circulars. It reiterated the ALM system guidelines for NBFCs meeting specific asset or deposit thresholds, nomination rules for depositors, and requirements for safe custody of liquid assets in exclusive CSGL or demat accounts.
What it means for you
NBFCs must ensure they have an ALM system in place if their asset base is Rs.100 crore or more, or if they hold public deposits of Rs.20 crore or more, with half-yearly reporting to RBI. They must also accept nominations from depositors in the prescribed format and maintain liquid assets in dedicated CSGL or demat accounts to protect depositor interests.
What you must do
- Implement ALM system if your NBFC meets the asset or deposit thresholds, and submit half-yearly ALM returns to RBI within one month of each half-year end.
- Accept deposit nominations from depositors using the format specified under the Banking Companies (Nomination) Rules, 1985.
- Maintain liquid assets in an exclusive CSGL or demat account with a scheduled commercial bank, SHCIL, or SEBI-registered depository participant, and operate it only for compliance-related transactions.
Who it affects
All NBFCs, including RNBCs, irrespective of public deposit acceptance, NBFCs with asset base of Rs.100 crore or more, NBFCs holding public deposits of Rs.20 crore or more, Depositors of NBFCs
Which NBFCs are required to implement the ALM system?
NBFCs engaged in equipment leasing, hire purchase finance, loan, investment, or residuary non-banking activities with an asset base of Rs.100 crore or more (whether accepting public deposits or not), or those holding public deposits of Rs.20 crore or more, as per audited balance sheet as of March 31, 2001.
What are the reporting requirements for the ALM system?
NBFCs holding public deposits must submit half-yearly ALM returns comprising three statements: structural liquidity, short-term dynamic liquidity, and interest rate sensitivity, within one month of the close of each half-year.
How should NBFCs hold liquid assets for compliance with Section 45-IB?
Liquid assets must be held in an exclusive CSGL or demat account with a scheduled commercial bank, SHCIL, or SEBI-registered depository participant, and the account should be used only for purchase/sale due to changes in public deposits or encashment on maturity.