What changed
RBI circular DOR.ACC.REC.No.20/21.04.018/2022-23, issued April 19, 2022, introduces new disclosure requirements for NBFCs in their financial statements, as per the SBR framework. These disclosures are supplementary to existing laws and standards, and apply to all NBFCs, with specific requirements varying by layer. The guidelines take effect for annual statements ending March 31, 2023, onwards.
What it means for you
NBFCs must now incorporate additional disclosures in their notes to accounts, layered as per SBR, which could increase compliance costs and require more detailed financial reporting. Lenders and investors will gain greater transparency into NBFC financials, aiding risk assessment. Banks with NBFC exposures should monitor these disclosures for better credit evaluation.
What you must do
- Review the Annex to the circular for layer-specific disclosure requirements applicable to your NBFC.
- Update financial reporting templates to include the new disclosures for annual statements from March 31, 2023.
- Ensure compliance teams are trained on SBR disclosure norms to avoid regulatory gaps.
- Coordinate with auditors to validate that additional disclosures meet RBI standards.
Who it affects
All Non-Banking Finance Companies (NBFCs), Auditors and compliance teams of NBFCs, Banks and lenders with NBFC exposures
When do these new disclosure requirements become effective?
They are effective for annual financial statements for the year ending March 31, 2023, and onwards.
Do these disclosures replace existing requirements?
No, they are in addition to existing disclosure requirements under other laws, regulations, or accounting standards.
Are all NBFCs treated equally under this circular?
No, the Annex specifies applicability based on NBFC layers under Scale Based Regulation, with higher layers facing more requirements.