Overview
A Non-Banking Financial Company operating in India must satisfy both RBI registration conditions and Companies Act governance standards. The two frameworks impose overlapping requirements on board composition, fit-and-proper criteria for directors, loan-to-deposit ratios, and reporting. A Company Secretary working with an NBFC must understand both layers — ensuring that board composition satisfies RBI guidelines while also meeting the Companies Act requirements for independent directors and board committees. Secretarial Audit is mandatory for NBFCs above specified thresholds, and the MR-3 findings are increasingly reviewed by RBI in supervisory examinations.
Key Compliance Obligations
Secretarial Audit (Mandatory for most NBFCs)
All NBFCs with assets of ₹100 crore or above are required to conduct a Secretarial Audit. The MR-3 report must be signed by a practising Company Secretary and annexed to the Annual Report. Findings of non-compliance are visible to the RBI.
Board Composition & Fit-and-Proper
Directors of NBFCs must meet RBI's fit-and-proper criteria — annual declarations, background verification, criminal record checks. The Board must have the prescribed proportion of independent directors. Director appointment and cessation filings (DIR-12) must be made within 30 days of each change.
Annual Return & Financial Disclosures
MGT-7, AOC-4, and Board's Report with all statutory annexures. Listed NBFCs face additional SEBI corporate governance requirements. The Annual Report must include a compliance certificate and CEO/CFO certification.
FEMA — Overseas Investments
NBFCs investing in overseas entities must comply with FEMA's ODI framework — filing ODI-1 with the AD Bank before remittance, submitting Annual Performance Reports by 31 December each year, and maintaining proper documentation of the overseas investment.
Board Committee Governance
NBFCs above threshold must constitute Audit Committee, Nomination & Remuneration Committee, and Risk Management Committee with defined terms of reference. Committee meeting minutes must be properly maintained and presented to the Board.
Common Compliance Failures
These are the gaps we most frequently encounter when onboarding financial services & nbfc clients — situations that require remediation before the company can present a clean compliance record to investors, lenders, or acquirers.
- RBI inspection findings on secretarial non-compliance — board minutes deficient, committee terms not formalised
- Director fit-and-proper declarations not obtained annually — technical violation
- Secretarial Audit qualification for delayed filings cited in RBI inspection report
- FEMA ODI annual performance report missed — RBI/FEMA enforcement action
- Board composition not meeting independent director requirements — corporate governance red flag
Key Risk
RBI supervisory inspections increasingly examine secretarial records and Secretarial Audit reports. Non-compliance in board governance and mandatory filings has led to RBI directed corrective action against NBFCs.
How We Help
We provide end-to-end governance and compliance support for financial services & nbfc companies — from maintaining the annual compliance calendar to managing FEMA filings, structuring equity events, and preparing for investor due diligence. Every engagement is handled by a qualified governance and advisory professional with direct client access.