April 11, 2022<\/p>\n\n\n\n
The Chairman \/ Managing Director \/ Chief Executive Officer
All Non-Banking Financial Companies<\/p>\n\n\n\n
Madam \/ Dear Sir,<\/p>\n\n\n\n
Please refer to the Reserve Bank\u2019s guidelines on \u2018Scale Based Regulation (SBR): A Revised Regulatory Framework for NBFCs\u2019 issued vide Circular Ref.DOR.CRE. REC.No.60\/03.10.001\/2021-22 dated October 22, 20211. As indicated therein, NonBanking Financial Companies in the Upper Layer (NBFC-UL) and Middle Layer (NBFC-ML) would be required, inter alia, to have an independent Compliance Function and a Chief Compliance Officer (CCO). Accordingly, this Circular shall be applicable to all NBFC-UL and NBFC-ML. NBFCs in the Base Layer (NBFC-BL) shall continue to be governed under the existing guidelines2.<\/p>\n\n\n\n
2. As part of the overall structure for Corporate Governance, Compliance Function serves a critical role. Accordingly, it has been decided to introduce certain principles, standards and procedures for Compliance Function in NBFC-UL and NBFC-ML, keeping in view the principles of proportionality.<\/p>\n\n\n\n
3. NBFC-UL and NBFC-ML shall put in place a Board approved policy and a Compliance Function, including the appointment of a Chief Compliance Officer (CCO), based on the Framework given in the Annex, latest by April 1, 2023 and October 1, 2023, respectively.<\/p>\n\n\n\n
4. This Circular shall be placed in the immediate next meeting of the Board of Directors for information and devising an implementation strategy, under the Board\u2019s supervision, in a time-bound manner.<\/p>\n\n\n\n
Yours faithfully,<\/p>\n\n\n\n
(Arnab Kumar Chowdhury)
Chief General Manager-In-Charge<\/p>\n\n\n\n