Home › Circulars › RBI/2013-14/618

NBFCs must appoint designated director for PMLA compliance

No longer current — withdrawn, no replacement on file yet

Source: Reserve Bank of India · RBI/2013-14/618 · issued 29 May 2014 · ~2 min read

Quick answerRBI directs all NBFCs to nominate a designated director on their board to ensure compliance with PMLA obligations, following the amended Section 13(2) which empowers the Director to impose fines ranging from Rs 10,000 to Rs 1 lakh per failure.

The rule, in the simplest words

Every NBFC must pick one director from its board to be the 'designated director' for PMLA compliance.
The designated director is personally responsible for making sure the company follows PMLA rules.
If the company fails to follow PMLA, the Director can fine the company, the designated director, or any employee.
The fine for each failure is at least Rs 10,000 and can go up to Rs 1 lakh.
The Director can also give a warning, order specific actions, or ask for regular reports instead of a fine.

How it plays out — a real example

Rajesh, the compliance head at a mid-sized NBFC, receives this RBI circular. He schedules a board meeting where the board nominates Mrs. Mehta, an independent director, as the designated director. Rajesh updates the AML policy to include the new penalty provisions and arranges a training session for all staff, ensuring everyone knows the consequences of non-compliance.

What changed

The Prevention of Money Laundering (Amendment) Act, 2012 amended Section 13 of PMLA, 2002, granting the Director the power to impose fines on reporting entities, their designated directors, or employees for non-compliance. The amended Section 13(2) specifies penalties: a written warning, compliance directions, periodic reporting, or a fine between Rs 10,000 and Rs 1 lakh per failure. RBI now requires NBFCs to nominate a designated director on their board to ensure compliance with these obligations.

What it means for you

NBFCs must ensure a board-level director is explicitly responsible for AML/CFT compliance, making accountability clear and enforceable. The fine range (Rs 10,000 to Rs 1 lakh per failure) applies to the entity, the designated director, or employees, so individual liability is now possible. This strengthens the regulatory framework and pushes NBFCs to formalize compliance roles and processes.

Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.

What banks were required to do at the time

Nominate a designated director on your board to oversee PMLA compliance and record the nomination in board minutes.
Ensure the designated director is aware of their personal liability under Section 13(2) and has authority to enforce compliance.
Review your KYC/AML policies to align with the amended Section 13(2) and the Master Circular dated July 1, 2013.
Train staff on the new penalty provisions to avoid inadvertent non-compliance.

Who it affects

All Non-Banking Financial Companies (NBFCs), Board of Directors of NBFCs, Compliance officers and AML teams

❓ Common questions

Regulatory timeline

Decoded by BankPulse 2026-08-03 04:07 IST
repealed_by — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
Status change: withdrawn 03 Aug 2026, 04:00 IST

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

What is the penalty for non-compliance under the amended Section 13(2)?

The Director can issue a warning, direct compliance, require periodic reports, or levy a fine of not less than Rs 10,000 and up to Rs 1 lakh for each failure.

Who can be the designated director?

Any director on the board of the NBFC, nominated by the board to ensure compliance with PMLA obligations.

Does this apply to all NBFCs?

Yes, the circular is addressed to all Non-Banking Financial Companies.

📜 This document’s life story (1 recorded event, each backed by RBI’s own words)

Repealed by RBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)

RBI’s words: “Official withdrawal register entry #922: DNBS(PD).CC.No.378/03.10.42/2013-14 — "Know Your Customer (KYC) Norms / Anti-Money Laundering (AML) Standards / Combating of Financing of Terrorism (CFT) / Obl”

📜 Read the original circular — full text as issued by RBI

Notifications - Reserve Bank of India Skip to main content Selected Selected Change Language हिंदी Search the Website Search Home About Us ▼ About Us Organisation & Functions ▶ Organisation Structure Departments Offices Training Establishment ▶ College of Agricultural Banking Reserve Bank Staff College College of Supervisors RBI's Functions and Working Governors Deputy Governors Executive Directors Communication Policy of RBI Sources of Information ▶ Annual Publications Half-yearly Publications Quarterly Publications Monthly Publications Weekly Publications Occasional Publications SDDS NSDP Data Releases Publications available on Subscription General Information RBI History Museum ▶ The RBI Museum RBI Monetary Museum Notification ▼ Notifications Master Directions Master Circulars Amendment Directions Draft Notifications/Guidelines ▶ Draft Notifications/Guidelines Draft Directions (RE-wise) Index To RBI Circulars Standalone Circulars Circulars Withdrawn Press Releases Speeches & Media Interactions ▼ Speeches Media Interactions Memorial Lectures Podcasts Publications ▼ Biennial Annual Half-Yearly Quarterly Bi-monthly Monthly Weekly Occasional Reports Working Papers Legal Framework ▼ Act Rules Regulations Schemes Research ▼ External Research Schemes RBI Occasional Papers Working Papers RBI Bulletin History DRG Studies KLEMS State Statistics and Finances Statistics ▼ Data Releases Database on Indian Economy Public Debt Statistics Regulatory Reporting ▼ List of Returns Data Definition Validation rules/ Taxonomy List of RBI Reporting Portals FAQs of RBI Reporting Portals Home Notifications Notifications ( 510 kb ) Know Your Customer (KYC) Norms / Anti-Money Laundering (AML) Standards /Combating of Financing of Terrorism (CFT) / Obligation of NBFCs under Prevention of Money Laundering Act (PMLA), 2002 - Amendment to Section 13(2) RBI/2013-14/618 DNBS(PD).CC. No 378 /03.10.42 /2013-14 May 29, 2014 All Non Banking Financial Companies Dear Sirs, Know Your Customer (KYC) Norms / Anti-Money Laundering (AML) Standards /Combating of Financing of Terrorism (CFT) / Obligation of NBFCs under Prevention of Money Laundering Act (PMLA), 2002 - Amendment to Section 13(2) Please refer to paragraph III of Master Circular DNBS (PD).CC.No.339 /03.10.42/ 2013-14 dated July 1, 2013 on Know Your Customer (KYC) Guidelines / Anti-Money Laundering Standards (AML) / Prevention of Money Laundering Act (PMLA), 2002-Obligations of NBFCs in Terms of Rules Notified thereunder. 2. With the enactment of Prevention of Money Laundering (Amendment) Act, 2012 and amendment to Section 13 of the Act which provides for “Powers of Director to impose fine”, the section 13(2) now reads as under: “If the Director, in the course of any inquiry, finds that a reporting entity or its designated director on the Board or any of its employees has failed to comply with the obligations under this Chapter, then, without prejudice to any other action that may be taken under any other provisions of this Act, he may— (a) issue a warning in writing; or (b) direct such reporting entity or its designated director on the Board or any of its employees, to comply with specific instructions; or (c) direct such reporting entity or its designated director on the Board or any of its employees, to send reports at such interval as may be prescribed on the measures it is taking; or (d) by an order, levy a fine on such reporting entity or its designated director on the Board or any of its employees, which shall not be less than ten thousand rupees but may extend to one lakh rupees for each failure.” 3. In view of the above amendment, NBFCs may nominate a Director on their Boards as “designated Director” to ensure compliance with the obligations under the Prevention of Money Laundering (Amendment) Act, 2012. Yours faithfully, (Sindhu Pancholy) Deputy General Manager 2026 All Months January February March April May June July August September October November December 2025 All Months January February March April May June July August September October November December 2024 All Months January February March April May June July August September October November December 2023 All Months January February March April May June July August September October November December 2022 All Months January February March April May June July August September October November December 2021 All Months January February March April May June July August September October November December 2020 All Months January February March April May June July August September October November December 2019 All Months January February March April May June July August September October November December 2018 All Months January February March April May June July August September October November December 2017 All Months January February March April May June July August September October November December Archives 2016 All Months January February March April May June July August September October November December 2015 All Months January February March April May June July August September October November December 2014 All Months January February March April May June July August September October November December 2013 All Months January February March April May June July August September October November December 2012 All Months January February March April May June July August September October November December 2011 All Months January February March April May June July August September October November December 2010 All Months January February March April May June July August September October November December 2009 All Months January February March April May June July August September October November December 2008 All Months January February March April May June July August September October November December 2007 All Months January February March April May June July August September October November December 2006 All Months January February March April May June July August September October November December 2005 All Months January February March April May June July August September October November December 2004 All Months January February March April May June July August September October November December 2003 All Months January February March April May June July August September October November December 2002 All Months January February March April May June July August September October November December 2001 All Months January February March April May June July August September October November December 2000 All Months January February March April May June July August September October November December 1999 All Months January February March April May June July August September October November December 1998 All Months January February March April May June July August September October November December 1997 All Months January February March April May June July August September October November December 1996 All Months January February March April May June July August September October November December 1995 All Months January February March April May June July August September October November December 1994 All Months January February March April May June July August September October November December 1993 All Months January February March April May June July August September October November December 1992 All Months January February March April May June July August September October November December 1991 All Months January February March April May June July August September October November December Top Back to previous page More Links Bank Holidays Banking Glossary Citizen's Charter Complaints Contact Us COVID-19 Measures E-LMS Events FAQs Financial Education Forms IFSC/MICR Codes Important Websites Opportunities @ RBI RBI Clarifications RBI Kehta Hai RBI’s Vision and Values (1257 kb)--> Right to Information Act Tenders Follow RBI RSS Twitter YouTube Instagram Facebook LinkedIn © Reserve Bank of India. 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Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2013-14/618 · issued 29 May 2014. The plain-English explanation above is BankPulse’s own independent summary.

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BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=8912&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.