RBI rolls out implementation plan of ‘Core Financial Services Solution’ by NBFCs in advance ; fallout of the Scale Based Regulation (SBR)
Further to the Scale Based Regulation (“SBR” ) rolled out by the Reserve Bank of India (“RBI”) in October, 2021 about the Core Banking Solution , the RBI in a recent circular dated 23rd February, 2022 have decided that NBFCs – Middle Layer and NBFCs – Upper Layer with 10 and more fixed point service delivery units* as on October 1, 2022 shall be mandatorily required to implement Core Financial Services Solution (“CFSS” ), akin to the Core Banking Solution (“CBS” ) adopted by banks.
The CFSS must provide for seamless customer interface in digital offerings and transactions relating to products and services with anywhere / anytime facility, enable integration of NBFCs’ functions, provide centralised database and accounting records, and be able to generate suitable MIS, both for internal purposes and regulatory reporting.
The timeframe for implementation of the requirement is as under:
| Category of NBFC | Timeframe for implementation |
| NBFC – Middle and Upper Layers with 10 or more ‘Fixed point service delivery units’ | On or before September 30, 2025
However, NBFC-UL shall ensure that the CFSS is implemented at least in 70 per cent of ‘Fixed point service delivery units’ on or before September 30, 2024. |
| NBFC – Base Layer and NBFC – Middle and Upper Layers with fewer than 10 ’Fixed point service delivery units’ | Not mandatory. However, they may consider implementation of a Core Financial Services Solution for their own benefit. |
A quarterly progress report on implementation of the Core Financial Services Solution, along with various milestones as approved by the Board / Committee of the Board, must furnished by the NBFC to the Senior Supervisory Manager (SSM) Office of Reserve Bank starting from quarter ending March 31, 2023.
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*‘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 name of the NBFC and functions under administrative control of the NBFC. Administrative Offices and Back Offices which do not have any direct interface with customers should not be treated as a ‘Fixed point service delivery unit’.
Source : Reserve Bank of India
