NBFC Operations
What this domain tests
Day-to-day operating rules a branch, treasury or operations team actually applies: deposit mobilisation ceilings, statutory liquid assets, returns and records, and outsourcing boundaries.
Deposits (deposit-taking NBFCs)
- Public deposits only under a valid deposit-taking CoR, an investment-grade credit rating and a board-approved, disclosed interest rate policy.
- Ceiling: 1.5 times Net Owned Funds (NOF). NOF is not book net worth - it is owned funds less investments in shares of subsidiaries and other NBFCs, intangible assets and similar deductions.
- Tenor 12 to 60 months; no demand deposits, no cheque facility, no deposit insurance; no deposits from outside India/NRIs without specific approval.
- Section 45-IB: liquid assets of at least 15% of public deposits outstanding, held in unencumbered approved securities.
Returns, records and outsourcing
- Periodic returns through COSMOS - NBS-1 (deposits), NBS-2/NBS-3 (prudential and NPA), NBS-7 (CRAR), NBS-9 (ALM) - as applicable to the layer.
- Books of account for 8 years under the Companies Act, 2013; PMLA records for 5 years.
- Core management functions (board, compliance, risk oversight) cannot be outsourced. Back-office or collection outsourcing needs a board-approved policy, vendor due diligence, confidentiality clauses and a documented exit route.
Worked example
An NBFC-D has NOF of Rs 40 crore and outstanding public deposits of Rs 52 crore. Deposit ceiling = 1.5 x 40 = Rs 60 crore, so Rs 8 crore of headroom remains. Liquid assets must be at least 15% x Rs 52 crore = Rs 7.8 crore in approved securities; treasury holds Rs 9 crore, which is compliant. At Rs 61 crore of deposits both the ceiling and the liquid-asset computation would fail.
Traps
Substituting net worth for NOF; applying the 1.5 times ceiling to total assets instead of NOF; computing liquid assets on NOF rather than on deposits outstanding; ignoring that inter-corporate and government money are excluded from "public deposit".