What changed
RBI issued a circular on February 27, 2013, specifying the Government of India's procedure for determining beneficial ownership under Rule 9(IA) of the Prevention of Money Laundering Rules, 2005. This replaces earlier guidance in the July 2, 2012 Master Circular. The new procedure provides clear thresholds and a stepwise identification process for NBFCs and RNBCs.
What it means for you
NBFCs must now systematically identify and verify beneficial owners for all non-individual clients, using defined ownership thresholds (25% for companies, 15% for partnerships and unincorporated associations). This tightens AML/CFT compliance and reduces opacity in ownership structures. Exemption for listed companies and their subsidiaries simplifies KYC for publicly traded entities.
What you must do
- Update your KYC policy to incorporate the three-step beneficial ownership identification process for all non-individual clients.
- Train staff on the new thresholds: >25% ownership for companies, >15% for partnerships and unincorporated associations.
- For trust clients, ensure identification of settlor, trustee, protector, and beneficiaries with ≥15% interest.
- Apply the exemption for clients that are listed companies or their majority-owned subsidiaries, documenting the basis.
- Review existing client records to identify any gaps in beneficial ownership documentation and remediate promptly.
Who it affects
All Non-Banking Financial Companies (NBFCs), Residuary Non-Banking Companies (RNBCs), Compliance and KYC teams at NBFCs, Clients of NBFCs that are legal persons or trusts
What is the threshold for controlling ownership interest in a company?
For a company, controlling ownership interest means ownership of or entitlement to more than 25% of shares, capital, or profits.
Are listed companies exempt from beneficial ownership identification?
Yes, if the client or the owner of the controlling interest is a company listed on a stock exchange, or a majority-owned subsidiary of such a company, identification of shareholders or beneficial owners is not required.
What should we do if no natural person is identified through ownership or control?
If no natural person is identified through ownership or control, you must identify the natural person who holds the position of senior managing official as the beneficial owner.