Acquiring an existing Non-Banking Financial Company (NBFC) can provide a buyer with an established corporate structure, an existing Reserve Bank of India (RBI) Certificate of Registration (CoR), operational infrastructure, customer relationships and a ready platform for carrying on permitted financial activities. However, completion of the share purchase or takeover does not bring the regulatory process to an end. In fact, the period immediately following completion is one of the most important stages of an NBFC acquisition. An NBFC remains a regulated financial entity even after a change in ownership. The new promoters and management therefore have to ensure that the transaction has been implemented exactly in accordance with the RBI approval, that corporate records are updated, regulatory portals remain accessible, the lending portfolio continues to comply with prudential norms and all customer, KYC, AML, financial reporting and governance obligations are maintained.

The RBI's Scale Based Regulation classifies NBFCs into Base Layer, Middle Layer, Upper Layer and Top Layer, with progressively enhanced regulatory requirements. Accordingly, the post-takeover checklist cannot be identical for every NBFC. The buyer must first identify the NBFC's exact regulatory category, activity and layer before determining the compliances applicable after acquisition.

In this article, CA Manish Mishra talks about Post-Takeover Compliance Checklist for NBFC Buyers.

Verify Compliance with RBI Takeover Approval

The first post-takeover responsibility is to ensure that the transaction was completed strictly in accordance with the approval granted by the RBI. RBI approval is fundamental because an acquisition carried out contrary to the regulatory conditions can expose the NBFC and its acquirer to serious regulatory consequences. RBI's acquisition and transfer of control framework requires prior written permission for any takeover or acquisition of control of an NBFC, regardless of whether it results in a change in management. Prior approval is also required where a change in shareholding results in acquisition or transfer of 26% or more of the paid-up equity capital of the NBFC, including progressive increases over time. A change in management resulting in a change of more than 30% of the directors, excluding independent directors, also attracts prior approval requirements.

RBI has clarified that even an intra-group transfer involving acquisition or transfer of 26% or more of the equity capital requires prior approval. After completion, the buyer should compare the final shareholding structure, consideration paid, directors appointed, directors resigning and effective date of control against the documents and information submitted to the RBI. Any material deviation should be evaluated immediately to determine whether a fresh approval, clarification or regulatory intimation is required.

Preserve RBI Approval and Takeover Documentation

The acquiring group should create a permanent regulatory file containing the RBI approval letter, takeover agreement, share purchase agreement, public notices, board and shareholder resolutions, share transfer instruments, payment evidence, valuation documents, declarations submitted by promoters and directors and all correspondence exchanged with the RBI.

This file is important because future RBI inspections may require the NBFC to demonstrate how ownership changed and whether all regulatory requirements were fulfilled. The new management should not rely solely on records retained by the sellers or transaction advisers. Complete copies should be transferred to the NBFC's compliance and secretarial teams.

Confirm Completion of the Mandatory Public Notice Process

The public notice requirement is a critical element of an NBFC takeover. RBI requires at least 30 days' public notice before the sale or transfer of ownership or control is actually effected. The notice is to be issued after obtaining RBI's prior permission and may be given jointly by the NBFC and the other party or separately by the parties concerned.

The notice should disclose the intention to sell or transfer ownership or control, details of the transferee and reasons for the transaction. RBI's framework requires publication in a leading national newspaper and a leading local vernacular newspaper covering the location of the NBFC's registered office. After the acquisition, copies of the newspapers, publication invoices and proof of the 30-day notice period should therefore be retained permanently in the transaction compliance file.

Hold the First Board Meeting After the Takeover

A properly documented board meeting should normally be held immediately after completion. This meeting establishes the new governance structure of the NBFC and formally records implementation of the transaction. The board may take note of the transfer of shares, RBI approval, change in promoters, resignations and appointments of directors, constitution or reconstitution of board committees, changes in authorised signatories and modifications to banking arrangements. The board should also review delegation of authority, compliance responsibilities, lending powers, related-party approval mechanisms and regulatory reporting responsibilities.

Where a new Managing Director, Chief Executive Officer, Chief Financial Officer, Company Secretary, Compliance Officer, Principal Officer or other key managerial personnel is being appointed, the applicable Companies Act and RBI requirements should be examined before the appointment becomes effective.

Update Directors and Key Managerial Personnel with the ROC

Changes in the board resulting from the takeover must be properly recorded under the Companies Act, 2013. Appointment, resignation or change in designation of directors generally requires prescribed filings with the Registrar of Companies through the MCA portal. The buyer should verify the Director Identification Number and Digital Signature Certificate of each incoming director and ensure that declarations of consent, non-disqualification, disclosure of interest and other prescribed documents have been obtained.

Where board or shareholder resolutions are required to be filed under Section 117 of the Companies Act, Form MGT-14 should also be evaluated and filed wherever applicable. The secretarial records should accurately reflect the effective date of control and the composition of the board after acquisition.

Update Shareholding and Statutory Registers

The Register of Members should be updated immediately after the share transfer becomes effective. Share transfer instruments, consideration records, board approvals and share certificates must correspond with the final transaction structure. The NBFC should also examine Sections 89 and 90 of the Companies Act concerning declarations of beneficial interest and Significant Beneficial Ownership. If the acquisition changes the ultimate beneficial ownership of the NBFC, the company must determine whether declarations and filings relating to significant beneficial owners are triggered.

This review is particularly important where shares are acquired through holding companies, investment companies, trusts, partnership structures or multi-layered corporate groups. The legal shareholder recorded in the Register of Members may not necessarily be the ultimate beneficial owner for regulatory purposes.

Verify the Certificate of Registration and Permitted NBFC Activity

A takeover does not automatically permit the buyer to undertake every type of financial activity through the acquired NBFC. The new promoters must verify the exact category appearing in the RBI Certificate of Registration and the activities permitted under the applicable RBI directions. For example, the regulatory requirements applicable to an NBFC-Investment and Credit Company may differ from those applicable to an NBFC-MFI, NBFC-Factor, NBFC-P2P, NBFC-Account Aggregator, Housing Finance Company, Core Investment Company or another specialised entity. The buyer should therefore ensure that its intended business model is compatible with the existing registration. A takeover should not be used as a means of commencing an activity for which the NBFC does not possess the required regulatory authorisation.

Determine the NBFC's Layer under Scale Based Regulation

Immediately after the acquisition, the management should determine whether the NBFC falls within the Base, Middle or Upper Layer under RBI's Scale Based Regulation framework. Layer classification materially affects governance, capital, risk management, disclosures and compliance requirements. The framework operates progressively, meaning requirements applicable to lower layers generally continue to apply to higher layers, while additional requirements are imposed as regulatory significance increases.

RBI also considers group-level NBFC assets for determining Middle Layer classification in specified cases. This becomes especially important where the acquirer already owns or controls other financial companies. The takeover may change the group structure and could affect the regulatory classification of the acquired NBFC or another NBFC in the group.

Reassess Capital Adequacy and Net Owned Fund Requirements

The buyer must review whether the NBFC continues to comply with the applicable Net Owned Fund and capital adequacy requirements after the acquisition. A takeover may affect the NBFC's capital structure through acquisition financing, dividend distributions, inter-company transactions, restructuring or subsequent capital infusions.

The finance and compliance teams should review paid-up capital, reserves, accumulated losses, intangible assets, deferred tax items, investments in group companies and other adjustments relevant to the computation of regulatory capital. If additional capital is introduced after acquisition, the company must separately examine Companies Act allotment requirements, valuation, private placement or rights issue provisions and RBI/FEMA requirements where the investor is a non-resident.

Conduct a Detailed Review of the Existing Loan Portfolio

One of the most important post-closing exercises is a loan-book review. The buyer should not assume that the historical classification of every loan by the seller is correct. A portfolio-level audit should examine borrower documentation, sanction terms, security creation, repayment schedules, overdue accounts, income recognition, asset classification, provisioning, restructuring, write-offs and fraud indicators. Related-party and group exposures should receive additional scrutiny.

The objective is to determine whether the reported gross and net NPAs, provisioning levels and income recognition position accurately represent the financial condition of the NBFC. Any divergence identified after the takeover may affect regulatory returns, financial statements and capital adequacy.

Review Prudential and Exposure Norm Compliance

The acquired entity must continue complying with RBI's applicable prudential norms. Depending upon its category and regulatory layer, these may include capital adequacy, asset classification, provisioning, concentration of credit and investments, leverage and large exposure requirements.

The RBI's Scale Based Regulation Directions prescribe different regulatory requirements for NBFCs depending on their layer, while Upper Layer entities are subject to enhanced requirements, including the Large Exposure Framework in relevant cases. The acquirer should therefore examine whether loans or investments involving the seller's group entities create concentration concerns after the change in control and whether any exposures must be reduced or restructured.

Reconstitute Governance and Board Committees

Post-takeover governance should be treated as a regulatory exercise rather than merely an administrative change. The buyer should verify whether committees such as the Audit Committee, Nomination and Remuneration Committee, Risk Management Committee, Asset Liability Management Committee and other committees are required for the particular NBFC.

Terms of reference, membership, meeting frequency and reporting responsibilities should be reviewed. Policies previously approved by the outgoing board should also be formally examined and, where appropriate, re-adopted by the new board. For NBFCs in the Middle and Upper Layers, RBI requires an independent compliance function headed by a Chief Compliance Officer, subject to the applicable framework.

Review Fit and Proper Status of Directors and Promoters

RBI regulation places significant importance on the integrity and suitability of persons controlling regulated financial entities. Accordingly, incoming directors and promoters should continue to satisfy applicable fit and proper expectations after completion.

During the RBI approval process, information about proposed shareholders and directors, source of funds, criminal proceedings, association with entities accepting deposits and bankers' reports may be required. The buyer should retain these declarations and establish an internal system for periodic declarations regarding conflicts of interest, criminal proceedings, financial integrity, directorships and related entities.

Reassess KYC and Anti-Money Laundering Compliance

KYC and AML compliance should be reviewed immediately because responsibility for historical customer files effectively passes to the new management. The NBFC should examine its customer identification processes, beneficial ownership verification, customer risk categorisation, ongoing due diligence, sanctions screening, suspicious transaction monitoring, record retention and reporting systems under RBI KYC directions and the Prevention of Money Laundering framework.

The buyer should also confirm that registrations and access credentials connected with FIU-IND, the Central KYC Records Registry and other applicable systems remain functional after changes in authorised officials. A sample review of customer files should be undertaken to identify missing KYC documents, outdated documents, incorrect risk categorisation and inconsistencies between customer profiles and actual transactions.

Change the Principal Officer and Compliance Contacts Where Necessary

Where the takeover results in the replacement of the Principal Officer, Designated Director, Compliance Officer or other authorised compliance personnel, the corresponding regulatory and portal information should be updated.

Official email addresses and mobile numbers should preferably belong to the NBFC rather than to individual employees or the seller's advisers. OTP-dependent regulatory accounts should be migrated immediately to authorised persons under the new management. Loss of access to a regulatory portal because an OTP continues to be delivered to a former director or employee can result in missed filings and unnecessary non-compliance.

Update RBI Regulatory Portals and Reporting Access

The incoming management should prepare an inventory of every RBI and regulatory portal used by the NBFC and verify administrative access. User IDs, registered email addresses, mobile numbers, Digital Signature Certificates and authorised officials should be reviewed. Responsibility for each regulatory return should be assigned to a named employee or professional.

The buyer should also examine the historical filing record to identify delayed, incorrect or pending returns. Acquiring an NBFC does not erase previous regulatory defaults; the company continues to remain responsible for its historical compliance position.

Review RBI Returns and Regulatory Reporting Calendar

A complete reporting calendar should be prepared based upon the NBFC's category, asset size, layer and activities. The management should identify monthly, quarterly, half-yearly and annual returns applicable to the NBFC and determine their respective due dates. The new finance team should reconcile the figures appearing in regulatory returns with the general ledger and audited financial statements. Particular attention should be given to asset classification, borrowings, public funds, capital adequacy, exposure concentration and other information used by RBI for supervisory purposes.

Review Credit Information Company Reporting

Where the NBFC extends credit and is required to report borrower information to Credit Information Companies, access rights and reporting systems should be reviewed after the takeover. The acquirer should verify whether borrower records are being submitted accurately and within the prescribed reporting cycle. Incorrect reporting can generate customer complaints and regulatory issues. The buyer should also ensure that mechanisms exist for correcting disputed credit information and responding to borrower complaints.

Review Fair Practices Code and Customer Documentation

The Fair Practices Code and customer-facing documentation of the NBFC should be examined in detail. Loan agreements, sanction letters, interest rate communication, penal charge provisions, recovery practices and grievance mechanisms should comply with applicable RBI directions. The buyer should not immediately introduce new charges or practices inherited from its wider group without verifying their compatibility with the NBFC regulatory. Customer-facing websites and applications should also be reviewed to ensure that the legal name of the NBFC, contact information, grievance mechanism and other regulatory disclosures are correctly displayed.

Review Digital Lending Arrangements

If the acquired NBFC carries on digital lending activities or works with Lending Service Providers, fintech companies or digital platforms, all relevant contracts and operational practices should be reviewed against RBI's digital lending. The buyer should evaluate customer consent, data collection, loan disbursement and repayment flows, Key Fact Statements, recovery-agent practices, fees paid to lending service providers and data-sharing arrangements. A change in promoter should not automatically result in customer data being shared throughout the buyer's corporate group. Data access should remain subject to applicable regulatory and legal requirements.

Examine Outsourcing Arrangements

NBFCs frequently outsource customer acquisition, collection, verification, IT support, call-centre operations and other functions. All material outsourcing agreements should therefore be reviewed. The acquirer should identify whether contracts contain change-of-control provisions, termination rights or consent requirements. It should also examine service-level obligations, data-security provisions, audit rights and regulatory access clauses. Responsibility for compliance remains with the regulated NBFC even where an activity is outsourced.

Review Fraud Risk Management and Internal Controls

RBI issued dedicated Master Directions on Fraud Risk Management for NBFCs, including Housing Finance Companies, in July 2024. A post-takeover review should therefore include the NBFC's fraud governance structure, early-warning mechanisms, investigation processes, reporting arrangements and staff accountability. The acquirer should particularly investigate high-risk transactions undertaken shortly before closing, unusual disbursements, connected-party loans, evergreening indicators, suspicious write-offs and transactions involving previous promoters.

Change Bank Account Signatories

All operating bank accounts should be reviewed immediately after completion. Former directors or employees should be removed as signatories where appropriate and new authorised personnel should be added pursuant to valid board resolutions. Net-banking credentials, payment maker-checker rights, cheque-signing powers, escrow accounts and fixed-deposit instructions should also be reviewed. The buyer should obtain direct balance confirmations from banks instead of relying exclusively on records handed over by the seller.

Update GST, Income Tax and Other Registrations

Changes in directors, authorised signatories, registered contact information and business details should be reflected in applicable registrations. GST portal access, PAN/TAN records, income-tax portal authorised representatives, TDS accounts and professional tax or local registrations should be reviewed. Historical GST, TDS and income-tax defaults should also be identified as part of the transition exercise. Tax liabilities incurred before the acquisition generally remain liabilities of the company even though contractual indemnities may exist against the seller.

Foreign Investment and FEMA Compliance

Where the buyer or any investor is a person resident outside India, the transaction requires a separate FEMA analysis in addition to RBI's NBFC takeover approval. The parties must examine the applicable entry route, sectoral conditions, pricing rules, payment mechanism and beneficial ownership restrictions. Foreign investment in regulated financial services may be permitted subject to the conditions prescribed under India's foreign investment framework; however, the precise nature of the NBFC activity and regulatory status must be checked before relying on the automatic route.

Where a transfer of equity instruments between a resident and non-resident is reportable, Form FC-TRS is generally required through the RBI foreign investment reporting framework within the applicable 60-day period.

Check FDI Downstream Investment Implications

A takeover involving a foreign-owned or foreign-controlled buyer may also change the status of the acquired NBFC for downstream investment purposes. If the NBFC makes investments in other Indian entities after becoming foreign-owned or controlled, the downstream investment rules should be examined carefully. Sectoral caps, entry routes, pricing, reporting and other conditions applicable to the downstream investee entity may become relevant. Therefore, the acquisition structure should be reviewed not only at the NBFC level but also across its subsidiaries, associates and portfolio companies.

Review Related-Party Transactions

Transactions involving the outgoing promoter, incoming promoter, directors and group companies require special scrutiny. Existing loans, guarantees, leases, service agreements and investments with related parties should be identified and reviewed under the Companies Act, RBI directions and applicable accounting standards.

The new board should ensure that transactions are conducted at appropriate terms and receive the approvals required under Sections 177, 184 and 188 of the Companies Act wherever applicable.

Review Security Interests and CERSAI Records

Where the NBFC has secured lending exposures, the buyer should conduct a security-document audit. Mortgage documents, hypothecation deeds, guarantees, title deeds and security perfection records should be verified. Where security interests are registered with the Central Registry of Securitisation Asset Reconstruction and Security Interest of India, the buyer should reconcile the CERSAI records with the NBFC's loan-management system. Missing or defective security perfection can materially affect recoverability even where the underlying loan appears commercially sound.

Review Litigation and Regulatory Proceedings

A complete litigation register should be prepared covering civil proceedings, consumer matters, arbitration, recovery proceedings, criminal complaints, cheque dishonour cases, tax disputes, labour matters and regulatory proceedings. All RBI inspection observations, show-cause notices, supervisory communications and compliance submissions should be transferred to the buyer. Pending regulatory matters should be specifically tracked because liability remains with the NBFC despite the change in ownership.

Review Employment and HR Matters

The buyer should evaluate employment agreements of senior management and key compliance personnel. Retention of experienced staff may be particularly important during the regulatory transition. PF, ESI, gratuity, professional tax, employee benefits and payroll compliance should be reviewed. Any change in employment conditions should be implemented in accordance with applicable law and contractual terms. Staff handling lending, collections and customer service should also receive training regarding the new governance and compliance structure.

Review Insurance Coverage

Existing insurance policies should be checked for change-of-control provisions and adequacy of coverage. Depending on the nature and scale of operations, this may include professional indemnity, directors' and officers' liability, cyber-risk, fidelity, employee and property insurance. The buyer should verify whether the previous promoter or management is specifically named in any policy and whether endorsements are required after the takeover.

Conduct an IT and Cybersecurity Handover

Control over IT systems should be transferred immediately and securely. Administrator credentials, cloud accounts, loan-management systems, email domains, backup systems, API integrations and cybersecurity tools should be identified. Access belonging to outgoing promoters, employees and consultants should be revoked unless specifically required for transition purposes. The buyer should ensure that the NBFC retains complete ownership and access to customer data, accounting records, loan files and regulatory information.

Review Statutory Auditor and Internal Audit Arrangements

The acquirer should evaluate the statutory auditor, internal auditor, secretarial compliance arrangements and other assurance functions. Where a change of auditor is proposed, the requirements of the Companies Act and applicable RBI directions should be examined. The buyer should also review previous audit qualifications, management letters and unresolved observations. An independent post-acquisition audit can help the buyer identify compliance deficiencies that were not visible during transaction due diligence.

Verify Historical Compliance Before Expanding Business

One common mistake is aggressively expanding the NBFC's loan book immediately after acquisition. The safer approach is first to conduct a comprehensive compliance health check. Before scaling operations, the buyer should verify the quality of the loan book, regulatory capital, pending RBI observations, KYC deficiencies, regulatory returns, tax status, litigation and technology systems. Expansion should begin only after material historical risks have been identified and an appropriate remediation programme has been adopted.

Establish a Post-Takeover Compliance Calendar

The acquiring group should implement a centralised compliance calendar covering RBI, MCA, tax, FEMA, FIU, CIC and other applicable filings. Each compliance should specify the relevant law, form, due date, responsible employee, reviewing officer and proof of completion. Evidence of filings and acknowledgements should be stored centrally. For a regulated financial company, maintaining a calendar is not simply an administrative convenience. It is an essential part of regulatory risk management.

Undertake a 90-Day Post-Acquisition Compliance Review

After the first few months under new management, the board should conduct a formal post-acquisition review. The review should compare the actual position of the NBFC against the acquisition due-diligence report and verify whether all agreed remediation actions have been completed. Any newly discovered liability should be evaluated both from the regulatory perspective and under the indemnity provisions of the share purchase agreement. The board should record the outcome of this exercise and create time-bound action plans for unresolved issues.

Importance of Post-Takeover Compliance for NBFC Buyers

Taking over an RBI-registered NBFC can reduce the time involved in building a financial-services business from the beginning, but an existing registration should never be viewed as a shortcut around regulation. The buyer acquires not only the company's licence and business opportunities but also its regulatory history, customer obligations, records, contracts and potential legacy liabilities.

RBI can take regulatory action where an NBFC fails to comply with applicable directions. The importance of continuing compliance is demonstrated by RBI's ongoing enforcement actions against NBFCs for failures relating to regulatory requirements. For this reason, buyers should evaluate an NBFC acquisition as a continuing regulatory transition rather than a single share-purchase transaction.

Conclusion

The completion of an NBFC takeover marks the beginning of a new compliance phase rather than the end of the acquisition process. The incoming promoters must ensure that RBI approval conditions have been fulfilled, statutory records and shareholding information are updated, directors and authorised officials are properly appointed, regulatory portals are transferred, and the NBFC continues to satisfy capital, prudential, KYC, AML, governance and reporting requirements. Particular attention should be given to the existing loan portfolio, NPAs, provisioning, related-party transactions, regulatory returns, customer records, security interests, pending litigation and previous RBI observations.

Where foreign investment is involved, FEMA and foreign-investment reporting requirements must also be independently examined. A carefully managed post-takeover transition enables the buyer to protect the value of the acquisition while reducing the risk of penalties, supervisory concerns and legacy compliance liabilities. Because NBFC regulation varies depending on the entity's activity and Scale Based Regulation classification, buyers should prepare an entity-specific post-acquisition compliance programme rather than relying on a generic corporate takeover checklist.

Frequently Asked Questions (FAQs)

Q1. Is RBI approval mandatory before acquiring an NBFC?

Ans. Yes. Prior RBI approval is required for specified NBFC takeover transactions, including acquisition of control, transfer of 26% or more of paid-up equity capital, and certain significant changes in management. Buyers should obtain the required approval before completing the transaction to avoid regulatory non-compliance and possible supervisory action.

Q2. Is a public notice required before completing an NBFC takeover?

Ans. Yes. After obtaining RBI approval, the parties are generally required to publish a public notice at least 30 days before transferring ownership or control. The notice should disclose the proposed transaction, details of the transferee and reasons for the transfer. Proof of publication should be maintained in compliance records.

Q3. What should be done immediately after completing an NBFC takeover?

Ans. After completion, the buyer should verify that the final shareholding, directors, management structure and consideration match the RBI-approved transaction. The company should then update statutory registers, ROC records, authorised signatories, banking access, regulatory portals, policies and compliance responsibilities to ensure smooth regulatory and operational transition.

Q4. Does the RBI Certificate of Registration transfer to the new buyer?

Ans. The Certificate of Registration generally continues with the NBFC because the same company remains the regulated entity after the share transfer. However, the buyer cannot undertake activities beyond the scope of the existing registration. Any new financial activity requiring separate regulatory approval must be evaluated before commencement.

Q5. Can an NBFC start new lending activities immediately after takeover?

Ans. The buyer should avoid rapid business expansion until the NBFC's compliance position is reviewed. Capital adequacy, Net Owned Fund, loan portfolio quality, NPAs, provisioning, KYC records, regulatory returns and pending RBI observations should first be examined. New activities should also be compatible with the NBFC's existing regulatory classification.

Q6. Does the buyer inherit the NBFC's previous compliance liabilities?

Ans. Yes. Since the NBFC remains the same legal entity, historical regulatory defaults, customer claims, tax liabilities, litigation and reporting deficiencies continue after takeover. Contractual indemnities from sellers may provide financial protection to the buyer, but they do not eliminate the NBFC's obligations towards RBI, customers or government authorities.

Q7. What ROC compliances may arise after an NBFC takeover?

Ans. ROC compliances may include filings relating to appointment or resignation of directors, changes in key managerial personnel and filing of applicable board or shareholder resolutions. The company should also update statutory registers, shareholding records and beneficial ownership information. Forms such as DIR-12 or MGT-14 may apply depending on circumstances.

Q8. Why is Scale Based Regulation important after an NBFC takeover?

Ans. RBI's Scale Based Regulation framework classifies NBFCs into Base, Middle, Upper and Top Layers. The classification determines the level of governance, capital, risk management, disclosure and supervisory requirements applicable to the NBFC. Buyers should identify the correct layer immediately after acquisition and design their compliance framework accordingly.

Q9. Should the buyer review the existing loan portfolio?

Ans. Yes. The buyer should conduct a detailed review of loans, security documents, repayments, overdue accounts, NPAs, restructuring, provisioning and related-party exposures. This helps identify hidden credit risks, incorrect asset classification and potential evergreening. Loan-book quality directly affects profitability, regulatory capital and the overall value of the acquired NBFC.

Q10. What happens to KYC and AML obligations after takeover?

Ans. KYC and AML obligations continue without interruption. The new management should verify customer identification records, beneficial ownership information, risk categorisation, transaction monitoring and periodic KYC updates. Access to FIU-IND, CKYCR and related systems should be reviewed, while historical deficiencies should be corrected through a documented remediation process.