**Policy Summary: Implementation of Core Financial Services Solution (CFSS) by Non-Banking Financial Companies (NBFCs)**
This circular, RBI202122175 DoS.CO.PPG.SEC1011.01.005202122, issued by the Reserve Bank of India (RBI) on February 23, 2022, mandates the implementation of a Core Financial Services Solution (CFSS) for specific categories of NBFCs. This requirement stems from para 3.2.3 (j) of the RBI's Circular Ref. DOR.CRE.REC.No.6003.10.001202122 dated October 22, 2021, concerning Scale Based Regulation (SBR) for NBFCs.
NBFCs in the Middle and Upper Layers with 10 or more fixed point service delivery units (defined as locations where business activity is conducted, manned by staff or agents, with uniform signage, and under the NBFC's administrative control, excluding administrative and back offices without direct customer interface) as of October 1, 2022, are required to implement CFSS. The CFSS should provide a seamless digital customer interface with "anywhere anytime" access, integrate NBFC functions, maintain a centralized database and accounting records, and generate Management Information Systems (MIS) for internal and regulatory reporting.
The implementation deadline for NBFCs Middle and Upper Layers with 10 or more fixed point service delivery units is September 30, 2025. NBFCs Upper Layer must ensure that the CFSS is implemented in at least 70% of their fixed point service delivery units by September 30, 2024. While not mandatory for NBFCs in the Base Layer and NBFCs in the Middle and Upper Layers with fewer than 10 fixed point service delivery units, they are encouraged to consider implementing CFSS.
Affected NBFCs must submit a quarterly progress report on CFSS implementation, including milestones approved by the Board/Committee of the Board, to the Senior Supervisory Manager (SSM) Office of the Reserve Bank, starting with the quarter ending March 31, 2023.
This circular is issued under Sections 45L and 45M of the Reserve Bank of India Act, 1934. Further information can be obtained from the Department of Supervision, Central Office, World Trade Centre, Centre I, Cuffe Parade, Colaba, Mumbai – 400 005. Contact details include Tel: 022-2216 3395, Fax: 022-2218 0157, and email: cgmicdoscorbi.org.in.
Key Entities Referenced
Reserve Bank of India: The central bank of India, which issued the circular.
Non-Banking Financial Companies (NBFCs): Financial institutions that provide banking services without holding a banking license.
Core Financial Services Solution (CFSS): A technological solution, similar to Core Banking Solution, for NBFCs to integrate functions and provide seamless customer interface.
Scale Based Regulation (SBR): A regulatory framework for NBFCs issued by the Reserve Bank of India.
NBFC Middle Layer: A category of Non-Banking Financial Companies as per the Scale Based Regulation framework.
NBFC Upper Layer: A category of Non-Banking Financial Companies as per the Scale Based Regulation framework.
Reserve Bank of India Act, 1934: The act of parliament under which the Reserve Bank of India was established and derives its powers.
Mumbai, Maharashtra: The city and state where the Department of Supervision, Central Office of the Reserve Bank of India is located.
RBI/2021-22/175
DoS.CO.PPG.SEC/10/11.01.005/2021-22 February 23, 2022
All Non-Banking Financial Companies
Madam / Dear Sir,
Implementation of ‘Core Financial Services Solution’ by Non-Banking Financial
Companies (NBFCs)
A reference is invited to para 3.2.3 (j) of the Reserve Bank’s Circular Ref.
DOR.CRE.REC.No.60/03.10.001/2021-22 dated October 22, 2021 on ‘Scale Based
Regulation (SBR): A Revised Regulatory Framework for NBFCs’ in terms of which
NBFCs with 10 and more branches are mandated to adopt Core Banking Solution.
2. Accordingly, it has been decided that NBFCs – Middle Layer and NBFCs - Upper
Layer with 10 and more ’Fixed point service delivery units’1 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 shall 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.
3. The timeframe for implementation of the requirement as indicated in Para 2 above
shall be as under:
1 For the purpose of this Circular, 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 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’.
पय�वे�ण िवभाग, के�ीय काया�लय, व�� ट�ेड स�टर, स�टर-1, कफ परेड, कोलाबा, मुंबई – 400 005
टेलीफोन: 022- 2216 3395 फै�: 022-2218 0157 ई-मेल - cgmicdosco@rbi.org.in
Department of Supervision, Central Office, World Trade Centre, Centre I, Cuffe Parade, Colaba, Mumbai - 400 005
Tel: 022-2216 3395 Fax: 022-2218 0157 e-mail: cgmicdosco@rbi.org.in
ब�क िह�ी म� पत्राचार का �ागत करता है।Category of NBFC Timeframe for implementation
NBFC – Middle and Upper Layers with On or before September 30, 2025
10 or more ‘Fixed point service delivery
units’ 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 Not mandatory. However, they may
and Upper Layers with fewer than 10 consider implementation of a Core
’Fixed point service delivery units’ Financial Services Solution for their own
benefit.
4. 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, shall be furnished by the NBFC to the Senior Supervisory Manager (SSM)
Office of Reserve Bank starting from quarter ending March 31, 2023.
5. This circular is issued under Sections 45L and 45M of Reserve Bank of India
Act,1934.
Yours faithfully,
(Arnab Kumar Chowdhury)
Chief General Manager