NBFCs cannot outsource core management functions like internal audit, strategic and compliance functions for know your customer (KYC) norms, sanction of loans and management of investment portfolio. What is the meaning of F in NBFCs?

BANKING GENERAL KNOWLEDGE

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

NBFCs cannot outsource core management functions like internal audit, strategic and compliance functions for know your customer (KYC) norms, sanction of loans and management of investment portfolio. What is the meaning of “F” in NBFCs?

A	Financial
B	Fundamental
C	Fully
D	Financial

Explanation:

Detailed explanation-1: -The guidelines are detailed under the following heads detailing the responsibility of NBFCs: core management functions including Internal Audit, Strategic and Compliance function and Decision-making functions such as KYC, loan sanctions, can’t be outsourced.

Detailed explanation-2: -NBFCs cannot offer gifts/incentives or any other additional benefit to the depositors. NBFCs should have minimum investment grade credit rating. The deposits with NBFCs are not insured. The repayment of deposits by NBFCs is not guaranteed by RBI.

Detailed explanation-3: -All CICs with public funds and asset size of ₹ 100 crore and above may continue to be registered with RBI. CICs without access to public fund need not register with the Reserve Bank.

Detailed explanation-4: -’Outsourcing’ is defined as the NBFC’s use of a Third-Party hereafter referred as (“Service Provider”) to perform activities on continuing basis that would normally be undertaken by the NBFC itself, now or in the future. ‘Continuing basis’ includes agreements for a limited period.

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