Lok Sabha Question No. 6584 (UNSTARRED), answered on 2018-04-06
Subject: Non-Banking Financial Companies
Ministry: FINANCE
Asked by: RAYAPATI SAMBASIVA RAO, POONAM  MAHAJAN

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE

## LOK SABHA UNSTARRED QUESTION NO. 6584

## TO BE ANSWERED ON FRIDAY, THE 06TH APRIL, 2018 Chaitra 16, 1940(Saka)

Non-Banking Financial Companies

## 6584. SHRI RAYAPATI SAMBASIVA RAO: SHRIMATI POONAM MANHAJAN:

Will the Minister of FINANCE be pleased to state:

- (a) whether the Government/Financial Intelligence Unit recently published a list of 9500 Non-Banking Financial Companies (NBFCs) categorising these companies as high risk financial institutions and blacklisting them, if so, the details thereof and the reasons therefor along with the criteria adopted to categorise them as high risk;
- (b) the number and names of such NBFCs, State/UT-wise;
- (c) the action taken or proposed to be taken by the Government against such NBFCs and the extent by which the public money has been recovered from these NBFCs during the last four years; and
- (d) whether the NBFCs blacklistedlcategorised as high risk financial institutions pose a systemic risk to the economy of the country, if so, the details thereof?

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI SHIV PRATAP SHUKLA)

- (a) As per Section 2(1)() read with 2(1)(wa) of PMLA 2002 Non-Banking Financial Companies (NBFCs) have been defined as Reporting Entities for FIU IND, for certain purposeslobligations as laid down in the PML Act and Rules: The Reserve Bank of India is the regulator for Non Banking Financial Companies (NBFCs).

Out of the 11456 NBFC's registered with RBl as on 31.01.2018,9491 NBFCs had not registered their   Principal Officers (PO) with FINNET   portal of FIU-IND as on 31.01.2018. Since these 9491 NBFCs had failed to fulfil the very basic obligation of registering their PO with FIU IND under PMLA & PML Rules, remain outside the reporting regime of FIU-IND and therefore, are not filing the statutory reports relating to transactions specified under PML Act and Rules, which are obliged to file. Therefore, FIU- IND had categorised these unregistered NBFCs as high risk financial institutions as could a risk to the integrity of the country's financial system: they they they they pose

FIU-IND has on 20.03.2018 classified them as 'Non-compliant NBFCs who have not fulfilled their obligations under PML Act and Rules relating to Registration of Principal Officer' .

- (b) Only the names of 9491 NBFC were uploaded on the website of FIU IND which have been culled out from the list of NBFCs available on the website of RBI. FIU IND does not have the address of all 9491 NBFCs. The names and addresses of all these NBFCs may be obtained from RBIIRBI Website which are available on the RBI link www rbi org in/scriptslbs\_nbfclist aspx
- (c) FIU IND uploaded the list of 9491 non-compliant NBFCs on its website. A press release dated 22.3.2018 was also issued by Dlo Revenue inter-alia mentioning the statutory   provisions of PMLA  relating to NBFC and  mandatory requirement of registration of NBFCs and their Principal Officer (PO) on FINnet Gateway portal of FIU IND for filing prescribed reports. Press release also indicates that the said list has been published so as to enable the bankers to conduct enhanced due diligence of transactions carried out by such NBFCs:

These efforts and action undertaken by FIU IND are aimed to get these erring NBFCs registered with FIU IND, and thus bring them into the ambit of mandatory reporting regime

Since the list of such 9491 NBFCs was uploaded on FIU-IND website, PO of 1002 NBFCs out of the above mentioned list have registered with FIU-IND till 31.03.2018

- (d) AII Reporting Entities are required to fulfil their obligations under the PML Act and Rules to ensure a strong Anti-money Laundering(AML)Combating Financing of Terrorism (CFT) framework in the country: The publication of the names of NBFCs on the official website of FIU-IND is a step in this direction: