Non-Deposit Taking NBFC Private Company Policies

1. Policies Under RBI Regulations for NBFCs

RBI mandates various policies to ensure sound governance, risk management, and customer protection for NBFCs:

• Fair Practice Code (FPC) Policy: RBI requires NBFCs to frame a Fair Practice Code to promote transparency in dealings with customers regarding loan terms, interest rates, recovery practices, etc.
• Anti-Money Laundering (AML) & Know Your Customer (KYC) Policy: NBFCs must comply with the Prevention of Money Laundering Act (PMLA) and RBI’s Master Direction on AML/KYC norms.
• This includes customer identification, record-keeping, and reporting suspicious transactions.
• Internal Complaints Redressal Policy: As per RBI guidelines, NBFCs should have a mechanism to address customer complaints efficiently.
• Asset Liability Management (ALM) Policy: To manage liquidity and interest rate risks, NBFCs are required to maintain an ALM framework.
• Risk Management Policy: To identify, assess, and mitigate operational, credit, market, and other risks.
• Credit Policy: To lay down the procedures and principles for lending, including credit appraisal, sanctioning, and monitoring.
• Information Technology (IT) Policy: Covering data security, IT governance, and cybersecurity measures.
• Data Privacy Policy: Although specific laws on data privacy are evolving, NBFCs must adhere to RBI guidelines and best practices for customer data protection.
• Outsourcing Policy: Governing the outsourcing of activities to third parties, in compliance with RBI guidelines.
• Internal Audit Policy: To ensure regular internal control checks and compliance audits.
• Whistleblower Policy: Encourages employees to report unethical or illegal practices within the company.

2. Policies Under Companies Act, 2013

The Companies Act mandates certain policies for corporate governance and compliance:

• Board Diversity Policy: If applicable (especially for larger companies), to promote diversity in the board composition.
• Nomination and Remuneration Policy: Applicable for appointment and remuneration of directors and key managerial personnel.
• Corporate Social Responsibility (CSR) Policy: Mandatory for companies meeting certain thresholds of turnover, net worth, or profit.
• (Check applicability for NBFCs.)
• Vigil Mechanism/Whistleblower Policy: As per Section 177 of the Act, companies are required to have a vigil mechanism for directors and employees to report concerns.
• Related Party Transaction Policy: To regulate transactions with related parties ensuring fairness and transparency.
• Policy on Preservation of Documents: Guidelines on retention and disposal of company documents.
• Dividend Distribution Policy: If applicable, laying down criteria for declaration of dividends.
• Code of Conduct for Board Members and Senior Management: Though not explicitly a “policy,” this is a best practice under corporate governance norms.