The Financial Services industry is a dynamic ecosystem, evolving rapidly to keep up with the changing times and the needs of the people. Non-Banking Financial Companies (NBFCs) play a significant role in this ecosystem, offering a wide range of financial services to cater to the diverse needs of consumers and businesses. To ensure the stability and integrity of the NBFC sector, the Reserve Bank of India (RBI) has implemented various regulations and mandates over the years.

One such mandate introduced by the RBI for the NBFCs is the implementation of the Core Financial Services Solution (CFSS). This mandate aims at streamlining and strengthening the technology infrastructure of NBFCs to enhance their operational efficiency, risk management, and customer service, ultimately benefiting the industry and the customers.

What’s CFSS?

CFSS is a digital platform similar to Core Banking Solutions (CBS) used by banks. It provides a centralized accounting system and database, enabling NBFCs to integrate multiple functions on one platform for a smooth digital customer experience. It offers convenient customer interfaces and transaction capabilities with anytime, anywhere access. Furthermore, the platform enables comprehensive Management Information System (MIS) reporting, serving the dual purpose of meeting internal needs and fulfilling regulatory reporting requirements.

CFSS for NBFCs

As per the RBI’s guidelines, NBFCs that fall under the Middle Layer (ML) and Upper Layer (UL) categories and have 10 or more fixed point service delivery units as of October 1, 2022, must implement CFSS by September 30, 2025. Although the implementation is not mandatory for NBFCs with less than 10 fixed point service delivery units, they are advised to implement it for seamless business operations.

Implementation Purpose

The primary purpose of mandating CFSS for NBFCs is to streamline and automate NBFC operations, which will help them adapt to the dynamic market landscape and ever-growing customer expectations. The implementation will empower NBFCs to improve transparency for depositors and enable more efficient business monitoring.

Newgen’s Core Financial Services Solution for NBFCs

Newgen’s Core Financial Services Solution (CFSS), built on NewgenONE- a low code platform, streamlines the entire loan lifecycle by automating transactional processes, including rescheduling and closure. It efficiently tracks NPA accounts, automates fee and charge calculations, and facilitates billing. Additionally, CFSS offers lenders precise statements and reports while also managing the General Ledger and accounting for lending.

Solution offerings

Loan Origination Solution

Newgen’s CFSS for NBFCs offers a robust platform for lenders, featuring efficient lead capturing and data entry, integrated external credit checks, and pre-configured scoring engines. It ensures compliance with dynamic regulatory requirements through comprehensive underwriting and audit capabilities while also simplifying workflow and document management. The system supports single disbursal and various repayment modes, capturing essential banking and account details for efficient loan processing.

Loan Management Solution

The key functionality of Newgen’s Loan Management Software for NBFCs is the ability to handle bulk receipts and payment uploads. It comprises a robust repayment engine capable of accommodating various repayment types. It also has an auto-closure facility, which automates the loan closure process and facilitates easy rescheduling when necessary. The solution encompasses PDC (Post-Dated Cheque) management capabilities, enabling efficient tracking and processing of these commonly used payment instruments. Furthermore, the Loan Management Solution integrates seamlessly with accounting systems and offers provisioning functionality, ensuring that financial data is accurate and up-to-date.

Loan Collection Solution

The Loan Collections Software for NBFCs is a comprehensive system designed to streamline the process of managing loan collections. It operates by periodically sourcing data from the Core Banking System (CBS) and seamlessly integrates it with the Collection system. This integration enables the system to efficiently classify and allocate loans based on various criteria such as the loan amount, Days Past Due (DPD), and tenure. It also automatically assigns cases to tele callers and supports recording and tracking “Promise to Pay” and “Broken Promise” instances with associated action codes. The system also includes a legal case marking feature, which is crucial for identifying cases requiring legal action or intervention.

Get detailed insights into the solution- Newgen’s Core Financial Services Solutions for NBFCs

Bottom Line

RBI’s mandate for NBFCs to implement Core Financial Services Solutions (CFSS) is a significant step toward creating a more robust and resilient financial ecosystem and enhancing the stability and efficiency of the Indian financial sector. By embracing CFSS, NBFCs can not only streamline their operations and improve customer experience but also position themselves for long-term success in a rapidly evolving financial landscape.

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