RegTrack Digitising RBI Compliances for Financial Institutions

In accordance with the directive from the Reserve Bank of India (RBI), Compliance Management Systems Made Mandatory, financial institutions are required to adopt technology-driven solutions for overseeing their internal compliance processes and operations. RegTrack, our next-generation compliance management software, is tailored to meet these requirements, ensuring transparency, accountability, and timeliness in compliance. RegTrack offers real-time visibility into compliance statuses, streamlined automated workflows, and an integrated document management system.

NBFC_Landing

Empowering Compliance: Aligning with RBI Mandate through Our Compliance Management Software

RBI Requirement RegTrack
Provide a platform for effective communication and collaboration among all the stakeholders (business, compliance and IT teams, Senior Management, etc.) Reminders and escalations via emails from the product, & comments within the product.                                                                                                                          
Identify, assess, monitor and manage compliance requirements Compliance applicability assessment
Escalate issues of non-compliance Email Notification Engine
Ask for recorded approval from a competent authority for any deviations/ delays in compliance submissions/ filings Maker checker concept                                                                         
Provide a unified dashboard view to Senior Management on the compliance position of the Regulated Entity as a whole Colour coded Smart Dashboard with drill down capabilities                    

Scale based regulations

The NBFC sector went through a major regulatory overhaul in 2021, when RBI notified the “Scale Regulation (SBR): A Revised Regulatory Framework for NBFCs” to align the regulatory requirements for NBFCs because of the change in their risk profiles, and their evolution in terms of size and complexity. The framework came into effect from 01.10.2022 and has reclassified NBFCs into 4 layers - Base Layer (BL), Middle Layer (ML), Upper Layer (UL), and Top Layer (TL). Previous classifications of NBFC- Infrastructure Investment Company, Core Investment Company, Microfinance Institution, Systemically Important/ Non-Systemically Important, Deposit-taking/Non-deposit taking etc. have been done away with.

Layer Previous Classifications
Base (BL)
  1. Non-deposit taking NBFCs below the asset size of ₹1000 crore
  2. NBFCs undertaking the following activities:
    1. NBFC-Peer to Peer Lending Platform (NBFC-P2P)
    2. NBFC-Account Aggregator (NBFC-AA)
    3. Non-Operative Financial Holding Company (NOFHC)
    4. NBFCs not availing public funds and not having any customer interface
Middle (ML)
  1. All deposit taking NBFCs (NBFC-Ds), irrespective of asset size
  2. Non-deposit taking NBFCs with asset size of ₹1000 crore and above
  3. NBFCs undertaking the following activities:
    1. Standalone Primary Dealers (SPDs)
    2. Infrastructure Debt Fund - Non-Banking Financial Companies (IDF-NBFCs)
    3. Core Investment Companies (CICs)
    4. Housing Finance Companies (HFCs)
    5. Infrastructure Finance Companies (NBFC-IFCs)
    6. Investment and Credit Companies (NBFC-ICCs)
    7. Micro Finance Institutions (MFIs)
    8. NBFC-Factors
    9. Mortgage Guarantee Companies (NBFC-MGCs)
Upper (UL) The Upper Layer shall comprise of those NBFCs which are specifically identified by the Reserve Bank as warranting enhanced regulatory requirement based on a set of parameters and scoring methodology as provided in the Appendix to this circular. The top ten eligible NBFCs in terms of their asset size shall always reside in the upper layer, irrespective of any other factor.
Top (TL) The Top Layer will ideally remain empty. This layer can get populated if the Reserve Bank is of the opinion that there is a substantial increase in the potential systemic risk from specific NBFCs in the Upper Layer. Such NBFCs shall move to the Top Layer from the Upper Layer.

There needs to be a Board approved policy in place for the adoption of the enhanced regulatory framework with an implementation plan. The implementation plan has to be shared with RBI. In addition, both UL and ML institutions are required to put in place a Compliance Function and appoint a Chief Compliance Officer (CCO) by 01.10.2023.

RegTrack’s Financial Institution Specific features

Reopening of compliances

A specialized platform for REs like banks and NBFCs, allowing internal audit teams to thoroughly review regulatory compliance. It also facilitates clarification requests on compliance documents. If unsatisfactory, the team can reopen compliance by documenting their observations.

Deviation workflow

A feature which is developed as per the RBI circular where the users will be empowered with the capability to request deviations in case of delayed or partially completed compliance. This functionality will involve a structured workflow encompassing specific compliance status, remarks, reports, and tracking of additional deadlines, all deviations will be approved by the competent authority which can be chief compliance officer or director.

Compliance categorization

The regulatory compliance framework for RBI Regulated Entities encompasses six main categories: Policy, Procedure, Disclosures, Customer Communication, Reporting, and Automation. Each compliance requirement will be linked to one of these broader categories, visible across all dashboards and reports.

User Friendly Compliance Descriptions

An additional column for compliance description which allows customers to update compliance actionable in their own language.

Task Module

The task module facilitates breaking down a primary compliance into multiple tasks, which can then be assigned to various departments.

Comparative analysis

A dedicated column to capture the compliance IDs from previous notifications and link them to the relevant new notifications.

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