FIU categorises 9,491 NBFCs as high risk for PMLA non-compliance

The Financial Intelligence Unit (FIU) under Finance Ministry has categorised around 9,491 non-banking financial companies (NBFC) as high risk prone financial institutions as they have not complied with stipulated provision of Prevention of Money Laundering Act (PMLA). There are about 12,000 NBFCs in country at present and high risk financial NBFCs account for about 80% of total NBFCs in the country. This list containing names of NBFCs has been updated till January 2018.

What does it means?

The publication of names of NBFCs in list is primarily to make aware public that they are not law compliant and that they should refrain from indulging into transactions with them. These NBFCs have been urged to comply with this “basic obligation” under PMLA and its rules for the past one and a half years, but to no avail. Once these NBFCs comply with the rules, their names will be taken off the list.


Under PMLA, the NBFCs, which include cooperative banks, are required to furnish details about their financial operations and transactions to the FIU in a prescribed format. The FIU had observed activities of these institutions and processed the data of these companies after demonetisation of high value currency notes of Rs 1,000 and Rs 500 in November 2016. It also had found that these NBFCs also did not comply with stipulated condition of appointing principal officer and designated director who are responsible for checking and reporting suspicious transactions and cash transactions of Rs 10 lakh and above. FIU is mandated to check crimes in Indian economy and alert enforcement agencies against such.

Non-banking financial companies (NBFCs)

NBFC is company registered under Companies Act. It is engaged in business of loans and advances, acquisition of shares, bonds, stocks, debentures and securities issued by government or local authority or other marketable securities. NBFCs can make investments and lend and hence, their activities are akin to that of banks. However, they cannot accept demand deposits and do not form part of payment and settlement system i.e. they cannot issue cheques drawn on itself.



Latest E-Books