As per the Reserve Bank of India’s (RBI) instructions, Non-banking Finance Companies (NBFCs) with 10 or more fixed point service delivery units in the upper and middle layer, as of 1 October 2022, will need to compulsorily implement ‘Core Financial Services Solution (CFSS)’ within 30 September 2025. NBFC executes its business operations via a fixed-point service delivery unit. Its workers or outsourced agents operate it. It displays uniform signage with the NBFC’s name and works under NBFC’s administrative control.
CFSS renders a hassle-free customer interface in digital transactions and offerings related to products and services with an anytime and anywhere facility. Also, it shall allow the integration of NBFCs’ functions to render centralised accounting records and databases. It will also create an appropriate Management Information System (MIS) for internal reasons and regulatory reporting purposes.
As per the framework of NBFCs, the middle layer comprises all deposit-seeking NBFCs, regardless of the asset size, non-deposit seeking NBFCs with an asset size of Rs 1,000 crore and more. The upper layer consists of finance firms that RBI recognises. The upper layer of NBFCs needs to ensure CFSS implementation happens at least in 70% of the fixed point service delivery units on or before 30 September 2024.
RBI also mentioned that NBFCs with lesser than ten fixed point service delivery units don’t need to implement CFSS. They could choose to implement for their benefit.
Starting from the quarter ending 31 March 2023, NBFC needs to submit a quarterly progress report w.r.t. the CFSS implementation and other milestones as sanctioned by the board to the Senior Supervisory Manager (SSM) Office of RBI.
For any clarifications/feedback on the topic, please get in touch with the writer at bhavana.pn@cleartax.in
Bhavana is a Senior Content Writer handling the GST vertical. She is committed, professional, and has a flair for writing. When away from work, she enjoys watching movies and playing with her son. One thing she can’t resist is SHOPPING! Her favourite quote is: “Luck is what happens when preparation meets opportunity”.
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