Reserve Bank Asks NBFCs To Implement Core Financial Services Solution
The Reserve Bank of India, vide Notification dated February 23rd 2022 No. RBI/2021- 22/1752 has notified that India’s Central Bank directed a certain class of NBFCs (Non-Banking Financial Companies) for Implementation of ‘Core Financial Services Solution’ by September 30th 2025 in an attempt to grant a consistent customer experience and a Centralized Data Repository.
NBFCs To Implement Core Financial Services
The notification clearly mandates for the implementation of CFSS by October 10th 2022, specifically for NBFCs – Middle Layer and NBFCs – Upper Layer having ten and more ‘fixed point service delivery units’. The Core Financial Services System (CFSS) is similar to the Core Banking Solution (CBS) used by banks.
The Upper Layer consists of NBFCs that the RBI has explicitly mentioned as warranting enhanced regulatory requirements consisting of a set of specifications and scoring method of analysis.On the other hand, the Middle Layer consists of all the deposit-accepting NBFCs (NBFC-Ds) irrespective of asset size; non-deposit taking NBFCs with asset size of INR 1,000 crore and above.
A ‘fixed point service delivery unit’ is a location in which an NBFC operates its business of Non- Banking Financial Intermediation and therefore is staffed either by its employees or by outsourced agents.
According to this circular, the mandatory implementation is done basically for two categories of NBFCs that Are Middle- and Upper-Layers with ten or more ‘Fixed point service delivery units’ on or before September 30th 2025.
However, for the NBFC – Base Layer and NBFC – Middle and Upper Layers with fewer than ten ’Fixed point service delivery units’, there is no mandate for implementation of CFSS. However, an option has been offered to them if they deem fit for their benefit.
Furthermore, the circular also stated that beginning with the quarter ending March 31st 2023, the NBFCs concerned must submit to RBI a quarterly progress detailed summary of the CFSS, along with key milestones.
The CFSS will need to provide customers with seamless functionality in digital products and operations pertaining to products or services at any location and facilitate the assimilation of NBFC functions at any time, therefore providing centrally controlled repository and accounting records while also being capable of generating appropriate MIS for internal and compliance disclosures
Therefore, the implementation of the Core Financial Services Solution by the non-banking financial institutions will ensure to provide its customers with a unified functionality in digital products and operations pertaining to products or services.
By entering the email address you agree to our Privacy Policy.