NBFC Accounting Services

NBFC Accounting Services

NBFC Accounting Services for Seamless Operations

Non-Banking Financial Companies play an essential role in the credit delivery mechanisms for India's growth. It also reflects the imperatives of the evolution of a vibrant, competitive, and articulate financial system. The NBFCs have recorded market growth in recent years in India.

The Reserve Bank of India has regrouped the entire asset financing NBFCs, engaged in assets financing such as Industrial machinery and transport vehicles. Whereas, the other companies will be classified as loan and investment companies. However, the NBFCs can be explained as equipment leasing, loan companies, Hire purchase, and residuary Non-Banking Companies.

According to Section 45-I (f) of RBI Act, 1934 non-banking financial company means–

• A financial institution that can be considered as a company.
• A non-banking institution functioning as a company that has as its principal business of receiving deposits under any scheme/ arrangement/ in any other manner/lending.
• Any other non-banking institution or class of institutions, as specified by the Bank with prior approval from the Central Government and also by publishing a notification in the Official Gazette.

NBFCs being a financial institution also need to follow the requirements set by Indian Accounting Standards. Hence, for NBFC Accounting, the financial statements for Non-Banking Financial Company (NBFC), which are drawn up, must comply with the Companies (Indian Accounting Standards) Rules, 2015.

The Ministry of Corporate Affairs through its notification dated 31^st January 2020 has inserted sub-rule (1A) of Rule 12 of the Companies (Accounts) Rules, 2014 as:

• Every Non-Banking Financial Company or NBFC that needs to comply with the Indian Accounting Standards (Ind AS) needs to file the financial statements with the Registrar along with Form AOC-4 NBFC (Ind AS) and also the consolidated financial statement if any with Form AOC-4 CFS NBFC (Ind AS).

Which NBFC Companies need to comply with Ind AS for NBFC Accounting?

The NBFC companies for the purpose of NBFC Accounting shall comply with the Indian Accounting periods beginning on or after April 1^st, 2018, with the comparatives that end on 31^st March 2018 or after that. NBFCs must fulfill following Ind AS criteria for NBFC Accounting:

• Non-Banking Financial Companies are having a net worth of Five hundred crore rupees or more.
• Holding, Subsidiary, Joint Venture, or Associate Companies of Companies has a net worth of five hundred crore rupees.

The NBFCs mentioned below needs to comply with the Indian Accounting Standards (Ind AS) for the NBFC accounting periods beginning on or after 1^st April 2019 with the comparatives for the time period ending on 31^st March 2019 or after that:

• NBFCs with equity or debt securities listed in the process of listing any stock exchange in India or outside India having a net worth of less than five hundred crore rupees.
• NBFCs function as unlisted companies with a net worth of two hundred and fifty crore rupees or more but less than five hundred crore rupees.