New ROC Forms for NBFCs (Ind AS)

The Ministry of Corporate Affairs (MCA) has made certain amendments in Schedule III of the Companies Act, 2013 vide its notification dated 11th October 2018. Pursuant to the said notification, Division III has been inserted in respect of Financial Statements for a Non-Banking Financial Company (NBFC) whose financial statements are drawn up in compliance of the Companies (Indian Accounting Standards) Rules, 2015.

Also, MCA vide its notification dated 31st January, 2020 (effective from the date of publication in the Official Gazette of India) has inserted the following sub-rule after sub rule (1) of Rule 12 of Companies (Accounts) Rules, 2014: 

 “(1A) Every Non-Banking Financial Company (NBFC) that is required to comply with Indian Accounting Standards (Ind AS) shall file the financial statements with Registrar together with Form AOC-4 NBFC (Ind AS) and the consolidated financial statement, if any, with Form AOC-4 CFS NBFC (Ind AS).”

Note: This sub-rule shall come into force on the date of their publication in the Official Gazette.

Last date of filing of AOC-4 NBFC (Ind AS) and AOC-4 CFS NBFC (Ind AS)

The MCA has further informed that the two new e-forms namely AOC-4 NBFC (Ind AS) &   AOC-4 CFS NBFC (Ind AS) are likely to be deployed on 31st January, 2020 & 17th February, 2020 respectively. Accordingly, MCA has extended the last date for filing of the said e-forms for all the eligible Companies for the Financial Year 2018-19, without payment of additional fees till 31st March, 2020.

Meaning of NBFC

NBFC” means a Non-Banking Financial Company as defined in clause (f) of section 45-I of the Reserve Bank of India Act, 1934 and includes Housing Finance Companies, Merchant Banking companies, Micro Finance Companies, Mutual Benefit Companies, Venture Capital Fund Companies, Stock Broker or Sub-Broker Companies, Nidhi Companies, Chit Companies, Securitization and Reconstruction Companies, Mortgage Guarantee Companies, Pension Fund Companies, Asset Management Companies and Core Investment Companies.

As per the Section 45-I (f) of RBI ACT, non-banking financial company means–

(i) a financial institution which is a company;

(ii) a non-banking institution which is a company, and which has as its principal business the receiving of deposits, under any scheme or arrangement or in any other manner, or lending in any manner;

(iii) such other non-banking institution or class of such institutions, as the Bank may, with the previous approval of the Central Government and by notification in the Official Gazette, specify.

Applicability of Companies (Indian Accounting Standards) Rules, 2015 on NBFCs

Principles for Calculating Net Worth

Net worth shall be calculated in accordance with the latest audited stand-alone financial statements.

Explanation: the NBFCs meeting the specified thresholds given in phase 2 for the first time at the end of an accounting year shall apply Indian Accounting Standards (Ind AS) from the immediate next accounting year.

Illustration:

1. The NBFCs meeting threshold for the first time as on 31st March, 2019 shall apply Ind AS for the financial year 2019-20 onwards.
2. The NBFCs meeting threshold for the first time as on 31st March, 2020 shall apply Ind AS for the financial year 2020-21 onwards and so on.

“Net worth” shall have the meaning assigned to it in clause (57) of Section 2 of the Companies Act, 2013. 

FAQs

Whether the NBFCs (listed or unlisted) are required to file their Financial Statements in XBRL?

Ans. No, non-banking financial companies, housing finance companies and companies engaged in the business of banking and insurance sector are exempted from filing of financial statements in XBRL  (Refer Rule 3 of Companies (Filing of Documents and Forms in XBRL) Rules, 2015).

What if Financial Statements already filed by the NBFCs before the MCA news came in September, 2019 about the filing of Financial Statement of NBFCs. Whether these companies are required to file its financial statements again in form AOC-4 NBFC?

Ans: No

In reference to question 2 above, what if the NBFCs has filed its financial statements after MCA news . Whether these companies are required to file its financial statements again in form AOC-4 NBFC?

Ans. Yes, these companies are required to file ots financial statements before 31st March, 2020 for the financial year 2018-2019.

If NBFC is Parent company and prepare consolidated financial statements as per Companies (Accounting Standards) Rules, 2006 (Ind AS is not applicable), in such cases whether subsidiary NBFC has to prepare its financial statements as per Ind AS?

Ans. No, the subsidiary companies shall continue to file its financial statements in its respective AS applicable on them and shall provide the details of its Financial Statements to its parent NBFCs companies for consolidation. (until Ind AS not applicable to them).

If Parent Company is not NBFC and prepares consolidated financial statements as per Ind AS, in such case whether Subsidiary NBFC has to prepare its financial statements as per AS or Ind AS?

Ans. Subsidiary NBFC should apply respective standards applicable to them and has to provide the relevant financial statement data to parent company for consolidation purposes (until Ind AS not applicable to them).

What is Net Worth?

Ans. Net Worth shall be calculated as per the definition provided in the Companies Act, 2013 under Section 2(57) i.e. the aggregate value of the paid-up share capital and all reserves created out of the profits, securities premium account and debit or credit balance of profit and loss account, after deducting the aggregate value of the accumulated losses, deferred expenditure and miscellaneous expenditure not written off, as per the audited balance sheet, but does not include reserves created out of revaluation of assets, write-back of depreciation and amalgamation.

DISCLAIMER: The information given in this document has been made on the basis of the provisions of the Companies Act, 2013 and Rules made thereunder. It is based on the analysis and interpretation of applicable laws as on date. The information in this document is for general informational purposes only and is not a legal advice or a legal opinion. You should seek the advice of legal counsel of your choice before acting upon any of the information in this document. Under no circumstances whatsoever, we are not responsible for any loss, claim, liability, damage(s) resulting from the use, omission or inability to use the information provided in the document.

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