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In our industry, many small businesses and individuals have been ignored by big banking leaders. For this reason, the concept of non-banking financial companies (NBFC) came to life. These companies play an important role in the business landscape, serving the underserved and unserved.
However, to set up and maintain an NBFC, companies need to follow strict regulatory compliance. Especially NBFCs that are operating in niche markets need to personalize services for the customer base and take care of dedicated compliance needs.
This article will discuss how IT solutions can help mitigate compliance challenges. Let’s see how Salesforce for Finance can be a blessing in disguise.
What is Compliance?
Compliance includes the rules and regulations that we need to adhere to secure data, public interests, and avoid financial risks. There are majorly two areas of compliance:
It includes the internal policies, accepted behaviors, and procedures that help us adhere to external compliance requirements. These are generated by the organization to avoid internal and external risks.
It includes internal policies and procedures that help maintain external or governmental regulations, laws, and guidelines.
Usually, any organization ensures both types of compliances to avoid risks and legal implications.
Implications of Non-Compliance
In an NBFC, compliance means achieving banking operations according to the external regulations to maintain integrity and business reputation.
Therefore, the compliance unit achieves the following:
- Securing financial and Personally Identifiable Information (PII)
- Reducing improper use of clients’ data, including every customer
- Preparing tax documents correctly every year
- Preventing any type of money laundering
- Creating internal policies and procedures for compliance
Consequences of non-compliance are:
- Risk of losing important financial PII data
- Risk of facing penalties and fines
- Sometimes, extreme cases of non-compliance face imprisonment
- Risk of reputational loss amongst customers leading to poor repeat and new business
With the right Salesforce solutions, you can mitigate these risks and eliminate chances of penalty and imprisonment.
Regulatory Compliance Needs In India
As an NBFC, here are some set of regulatory rules you need to follow:
- Your NBFC should be registered under a private limited in India.
- Your organization should have at least INR 2 crore worth net owned funds.
- You can renew and accept public deposits after a maximum of 60 months or a minimum after 12 months.
- NBFCs are not allowed to take deposits that need to be repaid on demand.
- The interest rate should be equal to or lower than the ceiling rate as offered by RBI.
- NBFCs need to have the required investment-grade credit rating.
- The RBI does not guarantee any repayment made by NBFCs.
- Every year, NBFCs need to submit a statutory auditor’s certificate of income and assets.
- Every year, NBFCs need to submit company details along with foreign funds.
- Every year, NBFCs need to submit an annual balance audited file with P&L.
- Every year, NBFCs need to reconcile public deposit rejections.
- Every year, NBFCs need to submit a monthly return.
Possible Ways to Address Non-Compliance With IT
To secure internal company documents and validate every process and transaction, Salesforce financial services cloud can help you. Below we have discussed how:
1. Regulatory Document Management
Salesforce solutions are equipped with a range of compliance certifications and regulations. For instance, GDPR, ISO 27001, etc. These certifications and compliance help manage documents according to regulations and laws.
This means that if according to GDPR, you need to confidentially secure users’ data and utilize this data as per the permission offered by the user, Salesforce financial services cloud is already equipped to maintain confidentiality, accountability, transparency, lawfulness, storage limitation, accuracy, etc. as per GDPR.
2. Submission Control
When customers are submitting their documents to the NBFC, these are safeguarded via the secure structure of Salesforce for finance. Further, through various features in Salesforce solutions, you can ensure that necessary documents are submitted according to necessary laws, regulations, and internal and external procedures.
3. Submission Validation
Similarly, through controls and validations, we can validate correct documents are submitted based on required laws and regulations necessary to prevent fraud. These validated documents help us justify different types of transactions occurring via NBFCs.
4. Reporting and Analytics
Salesforce for financial services offers you the power to analyze your data and transactions. Based on the collected data, you can understand patterns of your users, their saving habits, and compliance success. For example, we can understand the source of non-compliance in a particular domain with reporting and analytics of Salesforce solutions.
5. Secure Data Access
Finally, important support offered by Salesforce for finance is secure data access. This including using encryption, multi-factor authentication, user access control, and internal access control to secure access to data.
For example, Salesforce solutions can help you access data only after you clear multi-factor authentication. After a required number of wrong attempts, your account may be blocked for 24 hours.
With the help of IT solutions, NBFCs can manage the stringent compliance needs of the organization. Salesforce solutions help manage compliance by securing your access to data, document management, and document submission and control. However, to implement Salesforce for financial services carefully, you need support from a Salesforce consulting services company.
AIMDek Technologies is a leading provider of Salesforce solutions. We have helped a range of customers in the financial domain and helped them mitigate compliance challenges. If you want the same for your organization, connect with us and get a quote today!