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Functions of RBI - Department of Non-Banking Supervision (DNBS)
Mission
Developing NBFCs sector as an integrated and healthy part of the Financial System; and thereby
Affording indirect protection to the interests of their depositors Regulatory and Supervisory Framework The RBI Act as amended in January 1997 provides for, among other things, Entry norms for Non-Banking Financial Companies (NBFCs) and prohibition of deposit acceptance by unincorporated bodies with some exceptions
Powers of the Bank to issue asset side regulations
Compulsory registration, maintenance of liquid assets and reserve fund Directions on acceptance of deposits and prudential regulation Comprehensive regulation of deposit taking NBFCs Punitive action like cancellation of Certificate of Registration, prohibition from acceptance of deposits and alienation of assets, filing criminal complaints and winding up petitions in extreme cases, appointment of RBI observers in certain cases Under this basic legal framework, the RBI has evolved a supervisory framework for NBFCs comprising (a) on-site inspection (CAMELS pattern) (b) off-site monitoring through returns (c) market intelligence, (d) auditors' exception reports.
Developmental activities
Co-ordination with State Governments for State Legislations to curb unauthorised and fraudulent activities in this sector. Publicity for depositors' education and awareness, workshops / seminars of trade and industry organizations, depositors' associations. Informal Advisory Group as an aid to decision making. Promotion of Self-Regulatory Organization (SRO) of NBFCs Training programmes for personnel of NBFCs, State Governments and Police Officials.
Current Focus
New legislation for NBFCs to make unauthorised deposit taking activity a cognisable offence Further the cause of public awareness through education campaigns and workshops/seminars for various types of public, including auditors of NBFCs Put in place an asset liability and risk management system for NBFCs Enhance disclosure norms and new formats of financial statements Web enabled filing of returns
Organisational structure
Created in July 1997 and 16 Regional Offices opened till date. The Regional Offices and Central Office integrated with Wide Area Network (WAN) providing for data exchange and video conferencing. Regulatory and supervisory functions integrated for quick synergistic action
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