KYC, AML and CFT norms for NBFCs

CLR Note: The NBFCs/ RBFCs are in recent being recognised as complimentary to the banking sector, the reason being , is their functioning  like accepting deposits, making loans and advances, leasing, hire purchase, etc. They raise funds from the public, directly or indirectly, and lend them to ultimate spenders. They advance loans to the various wholesale and retail traders, small-scale industries and self-employed persons, thus broadening and diversifying the range of products and services offered by them to their customers. They are more into providing customer-oriented services with simplified procedures, attractive rates of return on deposits, flexibility and timeliness in meeting the credit needs of specified sectors; etc.  The only reason that they are termed as Non- banking  is because they cannot accept demand deposits, cannot issue cheque to its customers since not being a part of the payment and settlement system.

Thus, the NBGCs/ RBFCs are expected to consider and follow the KYC Norms, AML Standards, CFT for its better functioning to avoid any kind of money laundering, frauds etc.

RBI/2010-11/495; DNBS(PD).CC. No.216 /03.10.42/2010-11; May 02, 2011

All Non Banking Financial Companies /Residuary Non Banking Companies

Dear Sir,

Know Your Customer (KYC) Norms/ Anti- Money Laundering (AML) Standards/ Combating of Financing of Terrorism (CFT)

Financial Action Task Force (FATF) as a part of its ongoing review of compliance with the AML / CFT standards, has identified certain jurisdictions which have strategic AML /CFT deficiencies.

2. FATF, has issued a statement dated February 25, 2011 (copy enclosed) calling upon jurisdictions listed in the statement to complete the implementation of their action plan within the timeframe. The FATF, in the statement, has called upon its members to consider the information given in the statement.

3. All NBFCs/RNBCs are accordingly advised to consider the information contained in the enclosed statement.

Yours faithfully,

(Uma Subramaniam)
Chief General Manager-in-Charge
Encl: as above



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