RBI Probe on Spandana Sphoorty: What It Means for NBFC Compliance
Spandana Sphoorty Financial, a leading NBFC-MFI, is reportedly under the RBI’s scanner for potential violations of regulatory norms. While the full details remain confidential, this development has sparked debate around compliance hygiene in India’s NBFC sector.
Why Is Spandana Under RBI Lens?
As per , the RBI is reviewing Spandana’s practices related to:
- Loan recovery protocols
- Board-level disclosures
- Asset quality transparency
- Regulatory filings
The RBI’s due diligence suggests heightened scrutiny of how NBFCs are adhering to revised master directions and fair lending guidelines.
Key Compliance Areas NBFCs Must Review
Here’s a practical checklist for NBFCs and MFIs to avoid regulatory risk:
| Compliance Area | What to Ensure |
|---|---|
| KYC & Onboarding | Aadhaar eKYC, PAN validation, and address proof per RBI norms |
| Loan Sanction Process | Clearly documented approval matrix with signed customer consent |
| Recovery Practices | Adhere to RBI’s Fair Practices Code; no coercive recovery |
| Board Disclosures | Timely disclosure of NPAs, write-offs, and recovery status |
| Statutory Filings | Timely submission of NBS returns, auditor certifications |
| Interest Rate Policy | Publish rate methodology transparently under RBI guidelines |
RBI Regulations Governing NBFCs
Spandana’s case highlights the relevance of the following frameworks:
- RBI Master Direction – NBFC – Non-Systemically Important NDIs (March 2016)
- RBI Fair Practices Code for NBFCs (Updated 2022)
- Master Circular on Supervisory Framework for NBFCs
- Governance Directions for NBFCs (2021)
If found non-compliant, RBI may invoke powers under the Reserve Bank of India Act, 1934, especially Section 45L (inspection and inquiry).
NBFCs Should Immediately
- Review recovery practices for any hint of coercion
- Check past year filings for delays or inconsistencies
- Conduct a board review of internal audit reports
- Align borrower communication formats with RBI’s disclosure standards