What changed
RBI issued a master circular compiling all miscellaneous instructions for NBFCs up to June 30, 2011, to have a single reference point. It reiterated the ALM system requirement for NBFCs (specific types: equipment leasing, hire purchase finance, loan, investment, and residuary non-banking companies) meeting asset or deposit thresholds as per audited balance sheet as of March 31, 2001, with half-yearly reporting for deposit-taking entities. Nomination rules under Section 45QB were aligned with Banking Companies (Nomination) Rules, 1985. Safe custody of liquid assets must be in exclusive CSGL/demat accounts for SLR compliance.
What it means for you
NBFCs of the specified types must ensure they have an ALM system in place if they meet the asset or deposit criteria as per audited balance sheet as of March 31, 2001, and deposit-taking NBFCs must submit half-yearly ALM returns. The nomination rules simplify deposit succession for depositors. Liquid asset custody norms tighten depositor protection by requiring exclusive accounts for SLR securities. Non-deposit-taking NBFCs await separate supervisory guidelines.
What you must do
- Verify if your NBFC is of the specified type (equipment leasing, hire purchase finance, loan, investment, or residuary non-banking company) and meets the ALM threshold (asset base ≥₹100 crore or public deposits ≥₹20 crore as per audited balance sheet as of March 31, 2001) and implement ALM system if applicable.
- For deposit-taking NBFCs, submit half-yearly ALM returns (structural liquidity, short-term dynamic liquidity, interest rate sensitivity) within one month of half-year end (half-years ending September 30 and March 31).
- Adopt nomination forms per Banking Companies (Nomination) Rules, 1985 for depositors under Section 45QB.
- Maintain exclusive CSGL or demat accounts for liquid assets held under Section 45-IB, operated only for SLR compliance purposes.
Who it affects
NBFCs (equipment leasing, hire purchase finance, loan, investment, and residuary non-banking companies) with asset base ≥₹100 crore or public deposits ≥₹20 crore as per audited balance sheet as of March 31, 2001, Deposit-taking NBFCs required to submit ALM returns, NBFCs (including RNBCs) managing liquid assets for SLR compliance, Depositors of NBFCs using nomination facility
Which NBFCs must implement the ALM system?
NBFCs engaged in equipment leasing, hire purchase, loan, investment, or residuary non-banking activities with an asset base of ₹100 crore or more (regardless of public deposits) or holding public deposits of ₹20 crore or more (any asset size) as per audited balance sheet as of March 31, 2001.
What are the ALM reporting requirements?
Deposit-taking NBFCs must submit half-yearly ALM returns comprising three statements: structural liquidity, short-term dynamic liquidity, and interest rate sensitivity. The first return was due by October 31, 2002, for the half-year ending September 30, 2002, and continues similarly for half-years ending September 30 and March 31.
How should NBFCs handle nomination for deposits?
NBFCs must accept nominations from depositors in a form similar to that specified under the Banking Companies (Nomination) Rules, 1985, as per Section 45QB of the RBI Act. This allows depositors to nominate a person to receive deposit amounts upon their death.