NBFC governance is not one uniform checklist. First identify the entity’s RBI registration, business model and Base, Middle, Upper or Top Layer classification; then map the applicable Scale Based Regulation and specialised directions.
Current law before inherited content
The supplied draft was used as a topic brief, not as legal authority. Competitor promotions, duplicated wording, obsolete examples and unsupported claims have been removed. Always verify the effective notification and the facts of the transaction before acting.
Review status: Professional review pending. This general guide is not a legal opinion, tax computation, audit conclusion or filing instruction for a specific person.
Start with layer and activity
Regulatory intensity rises from Base to Middle and Upper Layers. Deposit acceptance, customer interface, asset size, systemic significance and specialised activities can trigger additional requirements.
Board and committee architecture
Define board skill needs, independence, fit-and-proper controls, information flow and committee mandates. Applicable NBFCs may require audit, nomination and remuneration, risk-management and other committees under RBI and company law.
Credit, liquidity and operational risk
Board-approved policies should cover underwriting, concentration, connected exposures, asset-liability management, provisioning, collections, outsourcing, cybersecurity, fraud monitoring and business continuity.
Customer protection and conduct
Implement fair-practices, transparent pricing, grievance redressal, recovery-agent controls, KYC/AML, data protection and product-governance checks. Growth targets must not override responsible lending.
Related parties and conflicts
Maintain conflict declarations, group exposure controls, arm’s-length evidence, recusal and escalation. Board packs should show exceptions, concentrations and overdue remediation rather than only aggregate performance.
Governance evidence and review
Publish required policies, preserve minutes and challenge, track regulatory returns, review layer status and changes, test internal controls and independently validate closure of audit and supervisory observations.
Need a fact-specific compliance review?
Map the applicable law, effective date, documents, filing route and ongoing obligations before relying on a general article.
Request a TargoLegal reviewFrequently asked questions
Are all NBFCs governed identically?
No. Layer, activity and other characteristics change the obligations.
What is the first governance step?
Confirm RBI registration category and SBR layer.
Does company law still apply?
Yes, alongside RBI directions and other applicable laws.
Why are independent controls important?
They counter conflicts, excessive risk-taking and weak management challenge.
Where should current rules be checked?
RBI notifications, master directions and the registered-NBFC list.
