Role of a Company Secretary in NBFC Governance and Compliance

Role of a Company Secretary in NBFC Governance and Compliance. Non-Banking Financial Companies (NBFCs) offers a wide range of financial services such as loans, asset financing, leasing, and investments, particularly to underserved segments of society. As these institutions operate outside the framework of traditional banks, they are regulated under a distinct and often complex legal regime. With increasing expectations from regulators like the Reserve Bank of India (RBI), the Ministry of Corporate Affairs (MCA), and occasionally SEBI (for listed entities), the need for robust governance and compliance structures in NBFCs has never been more important.
Amid this demanding regulatory environment, the Company Secretary (CS) plays an important role not merely as a compliance officer, but as a governance architect, regulatory advisor, and ethical guardian of the organization. Entrusted with maintaining transparency, ensuring legal adherence, and fostering sound corporate governance practices, the Company Secretary acts as a vital link between the management, the board, regulators, and stakeholders.
Learn more about NBFC License Restoration Complying with Regulations and RBI Norms.
This article delves into the comprehensive and strategic functions performed by Company Secretaries in NBFCs, highlighting their contributions in strengthening governance frameworks and achieving full-spectrum regulatory compliance. 
Company Secretary: A Governance Professional in NBFC
A Company Secretary in an NBFC is not just a compliance officer but a strategic advisor to the Board of Directors. The CS ensures that the company follows the best practices of corporate governance as laid down by regulatory bodies such as the Reserve Bank of India (RBI), Ministry of Corporate Affairs (MCA), and Securities and Exchange Board of India (SEBI) (where applicable). Followings are the key role of Company secretariate:
Board Support:
The Company Secretary plays a critical role in ensuring the effective functioning of the Board of Directors. This includes:

Scheduling and organizing board meetings in accordance with statutory requirements and internal policies.

Drafting and circulating the agenda in consultation with the Chairman and Managing Director.

Recording minutes of board meetings accurately, capturing key discussions, decisions, and resolutions.

Monitoring the implementation of board decisions and ensuring follow-through by the relevant departments.

This support ensures the board operates efficiently, adheres to governance norms, and is well-informed to make strategic decisions. 
Advisory Role 
The CS acts as a trusted advisor to the board and senior management, especially on legal, regulatory, and governance matters. Responsibilities include:

Advising directors on their roles, responsibilities, and limitations under the Companies Act, RBI directions, and other applicable laws.

Helping board members understand compliance implications of business decisions.

Assisting with matters such as director appointments, disqualifications, and conflict-of-interest disclosures.

This guidance is essential for ensuring that the board’s actions are legally sound and ethically responsible. 
Transparency and Disclosure 
One of the hallmarks of good governance is transparency. The CS ensures that the NBFC maintains full and timely disclosure of all relevant information, including:

Statutory filings with regulatory bodies like RBI, MCA, and SEBI.

Communication with shareholders, including financial statements, annual reports, and notices.

Disclosures of material events (especially for listed NBFCs), ensuring stakeholders are informed of changes affecting the company’s performance or governance.

By fostering openness, the CS enhances trust among regulators, investors, and the public. 
Code of Conduct
The Company Secretary plays a key role in fostering an ethical culture by:

Drafting, implementing, and monitoring the company's Code of Conduct and Ethics Policies.

Ensuring adherence to principles of integrity, accountability, and transparency across the organization.

Setting up whistleblower policies that encourage reporting of unethical or unlawful behaviour while protecting whistleblowers from retaliation.

These frameworks support ethical decision-making and reduce reputational and compliance risks.
Regulatory Compliances 
Regulatory compliances for NBFC are as follows:
RBI Regulatory Framework
The Reserve Bank of India (RBI) is the primary regulatory authority for NBFCs. The Company Secretary plays a vital role in ensuring the NBFC's compliance with its directions, circulars, and notifications. Key responsibilities include: 
The Reserve Bank of India (RBI) serves as the primary regulatory authority for Non-Banking Financial Companies (NBFCs), issuing various directions, circulars, and notifications to ensure financial stability and compliance within the sector. In this context, the Company Secretary (CS) plays a crucial role in ensuring that the NBFC aligns with all applicable RBI mandates. One of the key responsibilities of the CS is ensuring adherence to the RBI's Master Directions, which consolidate essential regulatory guidelines applicable to different categories of NBFCs, such as systemically important and non-systemically important entities. The CS is responsible for interpreting these directions, disseminating them internally, and ensuring their proper implementation across the organization.
Another area of responsibility is the filing of statutory returns mandated by the RBI. These include forms such as NBS-1, which covers financial performance and balance sheet data; NBS-2, which focuses on asset-liability management; and NBS-9, which relates to capital structure and risk-weighted assets. The Company Secretary ensures these returns are prepared accurately, submitted within the due timelines, and in the correct formats through the RBI’s online filing portals.
In addition to reporting obligations, the CS is responsible for monitoring compliance with prudential norms and capital adequacy requirements (CAR). These norms include restrictions on credit exposure, provisioning standards for non-performing assets, and maintaining the minimum capital adequacy ratio prescribed by the RBI. The CS ensures these financial safeguards are observed and reports any deviations or compliance risks to the Board of Directors for timely corrective action.
Furthermore, KYC (Know Your Customer) and AML (Anti-Money Laundering) compliance forms a major part of the RBI’s regulatory expectations. The CS contributes to drafting and implementing effective KYC/AML policies, facilitating regular training for employees, and coordinating with internal compliance teams to ensure proper reporting of Suspicious Transaction Reports (STRs) to the Financial Intelligence Unit (FIU-IND). Through these measures, the Company Secretary plays a pivotal role in ensuring that the NBFC operates within a strong, compliant, and transparent regulatory framework.
Companies Act, 2013
As a qualified professional under the Companies Act, the Company Secretary (CS) holds a central role in ensuring that the NBFC complies with all provisions of company law. One of the key responsibilities is the timely filing of statutory returns with the Registrar of Companies (ROC). This includes important forms such as MGT-7, which is the Annual Return detailing the company’s shareholder structure, directorships, and other essential corporate information, and AOC-4, which involves the submission of audited financial statements. The CS ensures these filings are completed accurately and within prescribed timelines to avoid regulatory penalties and maintain legal standing.
Another important duty is maintaining statutory registers and records, including registers of members, directors, charges, contracts, and investments. These documents are vital for demonstrating compliance during regulatory inspections and audits and help ensure transparency and legal accuracy in the company’s operations.
The CS also role in organizing and managing Annual General Meetings (AGMs) and Extraordinary General Meetings (EGMs). This includes issuing timely and legally compliant notices to stakeholders, preparing the agenda and draft resolutions, recording the minutes of the meeting, and ensuring that all decisions taken during these meetings are implemented appropriately. These meetings are not only statutory requirements but also serve as important platforms for communication between the company and its stakeholders.
Additionally, the CS is responsible for monitoring related party transactions and restrictions on loans to directors. Under the Companies Act, such transactions and financial dealings are subject to strict scrutiny and often require prior board or shareholder approval. The CS ensures that these legal provisions are followed, necessary approvals are obtained, and all such dealings are disclosed and reported accurately. This oversight helps maintain corporate transparency, prevents conflicts of interest, and safeguards the company’s governance framework. 
Secretarial Standards (SS-1 & SS-2)
The Secretarial Standards (SS), issued by the Institute of Company Secretaries of India (ICSI), are mandatory for all companies and aim to standardize secretarial practices across the corporate sector. SS-1, which relates to Board Meetings, outlines requirements such as proper notice periods, agenda preparation, permissible modes of participation (like video conferencing), and timelines for drafting and circulating minutes. Similarly, SS-2 governs General Meetings like AGMs and EGMs, covering aspects such as the format and timing of notices, quorum requirements, proxy rules, and voting procedures. The Company Secretary ensures that the NBFC adheres to these standards meticulously, thereby promoting transparency, accountability, and procedural consistency in corporate governance.
SEBI Regulations (for Listed NBFCs)
For NBFCs that are listed on stock exchanges, compliance with SEBI guidelines becomes mandatory. The CS plays a key role here too:
Compliance with SEBI LODR Regulations
The Listing Obligations and Disclosure Requirements (LODR) dictate how listed entities must:

Disclose material events and financial results.

Conduct board meetings and committee oversight.

Appoint independent directors, auditors, etc.

Managing Insider Trading Regulations
The CS oversees compliance with SEBI's Prohibition of Insider Trading regulations by:

Maintaining a list of designated persons.

Implementing trading windows and pre-clearance processes.

Reporting violations to the Audit Committee and SEBI.

Shareholding Disclosures & Investor Redressal
Listed NBFCs must disclose:

Changes in promoter or significant shareholder holdings.

Grievance resolution statistics.
 The CS ensures timely disclosure on stock exchanges and maintenance of investor grievance redressal mechanisms.

Role in Risk Management and Internal Controls
Reporting Non-Compliance Risks to the Board
One of the important responsibilities of the Company Secretary is to act as an early warning system for the Board of Directors. The CS monitors the company’s compliance and identifies areas where the NBFC may be exposed to legal, regulatory, or procedural risks. Upon identifying such risks whether through internal checks, regulatory updates, or audit observations the CS prepares detailed reports and brings them to the attention of the board. This ensures that the board is well-informed and can take proactive steps to mitigate or eliminate potential non-compliance issues before they escalate into legal or reputational challenges.
Coordinating with Internal and Statutory Auditors
The Company Secretary serves as a central coordination point between the NBFC and its internal as well as statutory auditors. This includes:

Facilitating the audit planning process by providing relevant company policies, minutes, registers, and past audit reports.

Ensuring that audit timelines are met and that management provides necessary responses and explanations.

Supporting auditors with access to information, ensuring smooth communication between them and the departments under review.

This coordination ensures that audits are conducted efficiently, impartially, and in accordance with applicable standards and legal frameworks.
Ensuring Audit Findings and Compliance Issues Are Appropriately Addressed
After audits are completed, the auditors may raise observations, non-conformities, or control weaknesses. It is the responsibility of the CS to review these findings and ensure that the management implements the necessary corrective and preventive actions. This might include policy revisions, procedural changes, employee training, or enhanced documentation practices. The CS may also follow up on these actions and report their status to the Audit Committee or Board, ensuring that compliance gaps are closed in a timely and effective manner.
Together, these responsibilities ensure that the NBFC maintains a robust risk management culture, complies with all legal and regulatory expectations, and enhances stakeholder confidence through strong internal controls.
Liaison with Regulatory Authorities
Company Secretaries act as a bridge between the NBFC and various regulatory and government agencies, including:

RBI for NBFC-specific compliances and inspections.

MCA for company law compliances.

SEBI, if the NBFC is listed or intends to go public.

Their ability to interpret regulatory updates and translate them into actionable policies makes them indispensable to the company’s leadership.
Ethical Governance and Stakeholder Engagement
The CS ensures that the NBFC maintains a culture of ethical governance, with an emphasis on:

Stakeholder transparency.

CSR (Corporate Social Responsibility) compliance.

Sustainable business practices.

Company Secretaries are often involved in training board members and employees on compliance, ethics, and governance principles. 
Conclusion
In the evolving and highly regulated financial sector, the role of a Company Secretary (CS) in an NBFC extends far beyond traditional compliance tasks. The CS is no longer viewed as merely a record-keeper or an administrative functionary. Instead, they are now recognized as a core governance professional who plays a pivotal role in shaping the company’s compliance culture, ethical conduct, and strategic direction.
With NBFCs operating under the close watch of regulatory bodies such as the Reserve Bank of India (RBI), the Ministry of Corporate Affairs (MCA), and, in some cases, the Securities and Exchange Board of India (SEBI), the demand for consistent, transparent, and proactive governance has never been higher. In this environment, the Company Secretary acts as the linchpin connecting the boardroom, regulatory landscape, and operational management. Their ability to interpret laws, anticipate regulatory changes, and guide the company through complex legal frameworks makes them indispensable to the leadership team.
The CS not only ensures legal and procedural compliance but also fosters a culture of accountability, transparency, and ethical decision-making throughout the organization. They actively contribute to risk management, audit coordination, board effectiveness, and stakeholder communication functions that are important to the NBFC’s credibility and long-term sustainability. 
Frequent Queries 
Q1. What specific RBI returns is a Company Secretary responsible for in an NBFC?
Ans. A Company Secretary ensures timely and accurate filing of various RBI-mandated returns, including:

NBS-1: Financial performance and balance sheet data

NBS-2: Asset-liability management details

NBS-9: Capital structure and risk-weighted assets

Statutory Auditor’s Certificate (SAC): To confirm compliance with regulatory norms
 These returns are typically filed through the RBI’s COSMOS portal and are essential for continued registration and compliance.

Q2. How does the Company Secretary ensure adherence to RBI Master Directions for NBFCs?
Ans. The CS interprets and disseminates applicable RBI Master Directions internally and ensures that policies, procedures, and internal controls are updated accordingly. This includes directions on prudential norms, fair practices code, KYC/AML, and capital adequacy. The CS also ensures regular compliance audits and reporting to the board on adherence status.
Q3. What role does the Company Secretary play in managing related party transactions under the Companies Act, 2013?
Ans. The CS identifies and tracks all related party transactions (RPTs), ensures that the required board or shareholder approvals are obtained (as per Section 188 of the Act), and that such transactions are properly disclosed in financial statements and annual returns. For NBFCs, such oversight helps avoid regulatory violations and ensures transparent governance.
Q4. Are Secretarial Standards (SS-1 and SS-2) legally binding for NBFCs?
Ans. Yes. As per Section 118(10) of the Companies Act, 2013, compliance with Secretarial Standards issued by the ICSI is mandatory for all companies, including NBFCs (except private companies in certain cases). The CS ensures compliance with SS-1 (Board Meetings) and SS-2 (General Meetings), covering agenda preparation, notices, quorum, minutes, and voting.
Q5. How does a Company Secretary support risk management in NBFCs without directly managing the function?
Ans. While not responsible for managing risk directly, the CS contributes by:

Reporting non-compliance or regulatory risks to the board

Assisting in policy formulation and risk register updates

Coordinating with auditors for risk-based audits

Ensuring that audit findings are addressed and tracked This positions the CS as a key player in integrating governance with risk oversight.

Non-Banking Financial Companies (NBFCs) offers a wide range of financial services such as loans, asset financing, leasing, and investments, particularly to underserved segments of society. As these institutions operate outside the framework of traditional banks, they are regulated under a distinct and often complex legal regime. With increasing expectations from regulators like the Reserve Bank of India (RBI), the Ministry of Corporate Affairs (MCA), and occasionally SEBI (for listed entities), the need for robust governance and compliance structures in NBFCs has never been more important.

Amid this demanding regulatory environment, the Company Secretary (CS) plays an important role not merely as a compliance officer, but as a governance architect, regulatory advisor, and ethical guardian of the organization. Entrusted with maintaining transparency, ensuring legal adherence, and fostering sound corporate governance practices, the Company Secretary acts as a vital link between the management, the board, regulators, and stakeholders.

Learn more about NBFC License Restoration Complying with Regulations and RBI Norms.

This article delves into the comprehensive and strategic functions performed by Company Secretaries in NBFCs, highlighting their contributions in strengthening governance frameworks and achieving full-spectrum regulatory compliance.

Company Secretary: A Governance Professional in NBFC

A Company Secretary in an NBFC is not just a compliance officer but a strategic advisor to the Board of Directors. The CS ensures that the company follows the best practices of corporate governance as laid down by regulatory bodies such as the Reserve Bank of India (RBI), Ministry of Corporate Affairs (MCA), and Securities and Exchange Board of India (SEBI) (where applicable). Followings are the key role of Company secretariate:

Board Support:

The Company Secretary plays a critical role in ensuring the effective functioning of the Board of Directors. This includes:

Scheduling and organizing board meetings in accordance with statutory requirements and internal policies.
Drafting and circulating the agenda in consultation with the Chairman and Managing Director.
Recording minutes of board meetings accurately, capturing key discussions, decisions, and resolutions.
Monitoring the implementation of board decisions and ensuring follow-through by the relevant departments.

This support ensures the board operates efficiently, adheres to governance norms, and is well-informed to make strategic decisions.

Advisory Role

The CS acts as a trusted advisor to the board and senior management, especially on legal, regulatory, and governance matters. Responsibilities include:

Advising directors on their roles, responsibilities, and limitations under the Companies Act, RBI directions, and other applicable laws.
Helping board members understand compliance implications of business decisions.
Assisting with matters such as director appointments, disqualifications, and conflict-of-interest disclosures.

This guidance is essential for ensuring that the board’s actions are legally sound and ethically responsible.

Transparency and Disclosure

One of the hallmarks of good governance is transparency. The CS ensures that the NBFC maintains full and timely disclosure of all relevant information, including:

Statutory filings with regulatory bodies like RBI, MCA, and SEBI.
Communication with shareholders, including financial statements, annual reports, and notices.
Disclosures of material events (especially for listed NBFCs), ensuring stakeholders are informed of changes affecting the company’s performance or governance.

By fostering openness, the CS enhances trust among regulators, investors, and the public.

Code of Conduct

The Company Secretary plays a key role in fostering an ethical culture by:

Drafting, implementing, and monitoring the company's Code of Conduct and Ethics Policies.
Ensuring adherence to principles of integrity, accountability, and transparency across the organization.
Setting up whistleblower policies that encourage reporting of unethical or unlawful behaviour while protecting whistleblowers from retaliation.

These frameworks support ethical decision-making and reduce reputational and compliance risks.

Regulatory Compliances

Regulatory compliances for NBFC are as follows:

RBI Regulatory Framework

The Reserve Bank of India (RBI) is the primary regulatory authority for NBFCs. The Company Secretary plays a vital role in ensuring the NBFC's compliance with its directions, circulars, and notifications. Key responsibilities include:

The Reserve Bank of India (RBI) serves as the primary regulatory authority for Non-Banking Financial Companies (NBFCs), issuing various directions, circulars, and notifications to ensure financial stability and compliance within the sector. In this context, the Company Secretary (CS) plays a crucial role in ensuring that the NBFC aligns with all applicable RBI mandates. One of the key responsibilities of the CS is ensuring adherence to the RBI's Master Directions, which consolidate essential regulatory guidelines applicable to different categories of NBFCs, such as systemically important and non-systemically important entities. The CS is responsible for interpreting these directions, disseminating them internally, and ensuring their proper implementation across the organization.

Another area of responsibility is the filing of statutory returns mandated by the RBI. These include forms such as NBS-1, which covers financial performance and balance sheet data; NBS-2, which focuses on asset-liability management; and NBS-9, which relates to capital structure and risk-weighted assets. The Company Secretary ensures these returns are prepared accurately, submitted within the due timelines, and in the correct formats through the RBI’s online filing portals.

In addition to reporting obligations, the CS is responsible for monitoring compliance with prudential norms and capital adequacy requirements (CAR). These norms include restrictions on credit exposure, provisioning standards for non-performing assets, and maintaining the minimum capital adequacy ratio prescribed by the RBI. The CS ensures these financial safeguards are observed and reports any deviations or compliance risks to the Board of Directors for timely corrective action.

Furthermore, KYC (Know Your Customer) and AML (Anti-Money Laundering) compliance forms a major part of the RBI’s regulatory expectations. The CS contributes to drafting and implementing effective KYC/AML policies, facilitating regular training for employees, and coordinating with internal compliance teams to ensure proper reporting of Suspicious Transaction Reports (STRs) to the Financial Intelligence Unit (FIU-IND). Through these measures, the Company Secretary plays a pivotal role in ensuring that the NBFC operates within a strong, compliant, and transparent regulatory framework.

Companies Act, 2013

As a qualified professional under the Companies Act, the Company Secretary (CS) holds a central role in ensuring that the NBFC complies with all provisions of company law. One of the key responsibilities is the timely filing of statutory returns with the Registrar of Companies (ROC). This includes important forms such as MGT-7, which is the Annual Return detailing the company’s shareholder structure, directorships, and other essential corporate information, and AOC-4, which involves the submission of audited financial statements. The CS ensures these filings are completed accurately and within prescribed timelines to avoid regulatory penalties and maintain legal standing.

Another important duty is maintaining statutory registers and records, including registers of members, directors, charges, contracts, and investments. These documents are vital for demonstrating compliance during regulatory inspections and audits and help ensure transparency and legal accuracy in the company’s operations.

The CS also role in organizing and managing Annual General Meetings (AGMs) and Extraordinary General Meetings (EGMs). This includes issuing timely and legally compliant notices to stakeholders, preparing the agenda and draft resolutions, recording the minutes of the meeting, and ensuring that all decisions taken during these meetings are implemented appropriately. These meetings are not only statutory requirements but also serve as important platforms for communication between the company and its stakeholders.

Additionally, the CS is responsible for monitoring related party transactions and restrictions on loans to directors. Under the Companies Act, such transactions and financial dealings are subject to strict scrutiny and often require prior board or shareholder approval. The CS ensures that these legal provisions are followed, necessary approvals are obtained, and all such dealings are disclosed and reported accurately. This oversight helps maintain corporate transparency, prevents conflicts of interest, and safeguards the company’s governance framework.

Secretarial Standards (SS-1 & SS-2)

The Secretarial Standards (SS), issued by the Institute of Company Secretaries of India (ICSI), are mandatory for all companies and aim to standardize secretarial practices across the corporate sector. SS-1, which relates to Board Meetings, outlines requirements such as proper notice periods, agenda preparation, permissible modes of participation (like video conferencing), and timelines for drafting and circulating minutes. Similarly, SS-2 governs General Meetings like AGMs and EGMs, covering aspects such as the format and timing of notices, quorum requirements, proxy rules, and voting procedures. The Company Secretary ensures that the NBFC adheres to these standards meticulously, thereby promoting transparency, accountability, and procedural consistency in corporate governance.

SEBI Regulations (for Listed NBFCs)

For NBFCs that are listed on stock exchanges, compliance with SEBI guidelines becomes mandatory. The CS plays a key role here too:

Compliance with SEBI LODR Regulations

The Listing Obligations and Disclosure Requirements (LODR) dictate how listed entities must:

Disclose material events and financial results.
Conduct board meetings and committee oversight.
Appoint independent directors, auditors, etc.

Managing Insider Trading Regulations

The CS oversees compliance with SEBI's Prohibition of Insider Trading regulations by:

Maintaining a list of designated persons.
Implementing trading windows and pre-clearance processes.
Reporting violations to the Audit Committee and SEBI.

Shareholding Disclosures & Investor Redressal

Listed NBFCs must disclose:

Changes in promoter or significant shareholder holdings.
Grievance resolution statistics.

The CS ensures timely disclosure on stock exchanges and maintenance of investor grievance redressal mechanisms.

Role in Risk Management and Internal Controls

Reporting Non-Compliance Risks to the Board

One of the important responsibilities of the Company Secretary is to act as an early warning system for the Board of Directors. The CS monitors the company’s compliance and identifies areas where the NBFC may be exposed to legal, regulatory, or procedural risks. Upon identifying such risks whether through internal checks, regulatory updates, or audit observations the CS prepares detailed reports and brings them to the attention of the board. This ensures that the board is well-informed and can take proactive steps to mitigate or eliminate potential non-compliance issues before they escalate into legal or reputational challenges.

Coordinating with Internal and Statutory Auditors

The Company Secretary serves as a central coordination point between the NBFC and its internal as well as statutory auditors. This includes:

Facilitating the audit planning process by providing relevant company policies, minutes, registers, and past audit reports.
Ensuring that audit timelines are met and that management provides necessary responses and explanations.
Supporting auditors with access to information, ensuring smooth communication between them and the departments under review.

This coordination ensures that audits are conducted efficiently, impartially, and in accordance with applicable standards and legal frameworks.

Ensuring Audit Findings and Compliance Issues Are Appropriately Addressed

After audits are completed, the auditors may raise observations, non-conformities, or control weaknesses. It is the responsibility of the CS to review these findings and ensure that the management implements the necessary corrective and preventive actions. This might include policy revisions, procedural changes, employee training, or enhanced documentation practices. The CS may also follow up on these actions and report their status to the Audit Committee or Board, ensuring that compliance gaps are closed in a timely and effective manner.

Together, these responsibilities ensure that the NBFC maintains a robust risk management culture, complies with all legal and regulatory expectations, and enhances stakeholder confidence through strong internal controls.

Liaison with Regulatory Authorities

Company Secretaries act as a bridge between the NBFC and various regulatory and government agencies, including:

RBI for NBFC-specific compliances and inspections.
MCA for company law compliances.
SEBI, if the NBFC is listed or intends to go public.

Their ability to interpret regulatory updates and translate them into actionable policies makes them indispensable to the company’s leadership.

Ethical Governance and Stakeholder Engagement

The CS ensures that the NBFC maintains a culture of ethical governance, with an emphasis on:

Stakeholder transparency.
CSR (Corporate Social Responsibility) compliance.
Sustainable business practices.

Company Secretaries are often involved in training board members and employees on compliance, ethics, and governance principles.

Conclusion

In the evolving and highly regulated financial sector, the role of a Company Secretary (CS) in an NBFC extends far beyond traditional compliance tasks. The CS is no longer viewed as merely a record-keeper or an administrative functionary. Instead, they are now recognized as a core governance professional who plays a pivotal role in shaping the company’s compliance culture, ethical conduct, and strategic direction.

With NBFCs operating under the close watch of regulatory bodies such as the Reserve Bank of India (RBI), the Ministry of Corporate Affairs (MCA), and, in some cases, the Securities and Exchange Board of India (SEBI), the demand for consistent, transparent, and proactive governance has never been higher. In this environment, the Company Secretary acts as the linchpin connecting the boardroom, regulatory landscape, and operational management. Their ability to interpret laws, anticipate regulatory changes, and guide the company through complex legal frameworks makes them indispensable to the leadership team.

The CS not only ensures legal and procedural compliance but also fosters a culture of accountability, transparency, and ethical decision-making throughout the organization. They actively contribute to risk management, audit coordination, board effectiveness, and stakeholder communication functions that are important to the NBFC’s credibility and long-term sustainability.

Frequent Queries

Q1. What specific RBI returns is a Company Secretary responsible for in an NBFC?

Ans. A Company Secretary ensures timely and accurate filing of various RBI-mandated returns, including:

NBS-1: Financial performance and balance sheet data
NBS-2: Asset-liability management details
NBS-9: Capital structure and risk-weighted assets
Statutory Auditor’s Certificate (SAC): To confirm compliance with regulatory norms

These returns are typically filed through the RBI’s COSMOS portal and are essential for continued registration and compliance.

Q2. How does the Company Secretary ensure adherence to RBI Master Directions for NBFCs?

Ans. The CS interprets and disseminates applicable RBI Master Directions internally and ensures that policies, procedures, and internal controls are updated accordingly. This includes directions on prudential norms, fair practices code, KYC/AML, and capital adequacy. The CS also ensures regular compliance audits and reporting to the board on adherence status.

Q3. What role does the Company Secretary play in managing related party transactions under the Companies Act, 2013?

Ans. The CS identifies and tracks all related party transactions (RPTs), ensures that the required board or shareholder approvals are obtained (as per Section 188 of the Act), and that such transactions are properly disclosed in financial statements and annual returns. For NBFCs, such oversight helps avoid regulatory violations and ensures transparent governance.

Q4. Are Secretarial Standards (SS-1 and SS-2) legally binding for NBFCs?

Ans. Yes. As per Section 118(10) of the Companies Act, 2013, compliance with Secretarial Standards issued by the ICSI is mandatory for all companies, including NBFCs (except private companies in certain cases). The CS ensures compliance with SS-1 (Board Meetings) and SS-2 (General Meetings), covering agenda preparation, notices, quorum, minutes, and voting.

Q5. How does a Company Secretary support risk management in NBFCs without directly managing the function?

Ans. While not responsible for managing risk directly, the CS contributes by:

Reporting non-compliance or regulatory risks to the board
Assisting in policy formulation and risk register updates
Coordinating with auditors for risk-based audits
Ensuring that audit findings are addressed and tracked This positions the CS as a key player in integrating governance with risk oversight.