RBI asks NBFCs to enable Core Fin Services Solution akin to that in banks

Upper & Middle layer NBFCs with 10 or more fixed point services delivery units should implement it by Sept 2025

The Reserve Bank of India (RBI) on Wednesday said non-banking finance companies (NBFCs) in the upper and middle layer, with ten or more fixed point service delivery units as of October 1, 2022, will have to mandatorily implement “Core Financial Services Solution (CFSS)” by September 30, 2025, a system akin to the Core Banking Solution used by banks.  

It will provide seamless customer interface in digital offerings and transactions relating to products and services with anywhere / anytime facility, the RBI said in a statement. Further, it will enable integration of NBFCs’ functions, provide centralised database and accounting records, and be able to generate a suitable management information system (MIS), both for internal purposes and regulatory reporting.

Earlier, the RBI had said, NBFCs with ten and more branches will be mandated to adopt Core Banking Solution. And a glide path of three years with effect from October 01, 2022 will be provided.

According to the scale-based framework for NBFCs, the middle layer consists of all deposit taking NBFCs, irrespective of asset size, non-deposit taking NBFCs with asset size of Rs 1,000 crore and above. Similarly, upper layer NBFCs consist of finance companies which are specifically identified by the RBI as warranting enhanced regulatory requirements.

While the RBI has asked the upper layer and middle layer NBFCs, with ten or more fixed point service delivery units, to implement the CFSS by September 30, 2025, the upper layer NBFCs have to ensure that the CFSS is implemented at least in 70 per cent of fixed point service delivery units on or before September 30, 2024.

When it comes to NBFCs with fewer than ten fixed point service delivery units, the RBI has said while it is not mandatory for them to implement CFSS, they may consider implementing it for their own benefit.

A fixed-point service delivery unit is a place of operation from where the business activity of non-banking financial intermediation is carried out by the NBFC and which is manned either by its own staff or outsourced agents. It carries uniform signage with the name of the NBFC and functions under administrative control of the NBFC.

“A quarterly progress report on implementation of the CFSS, along with various milestones as approved by the board, shall be furnished by the NBFC to the Senior Supervisory Manager (SSM) Office of Reserve Bank starting from quarter ending March 31, 2023”, the RBI said.