The full form of BFS is Board of Financial Supervision

The Board for Financial Supervision (BFS) was constituted in November 1994 to supervise the money market institutions in the country. The BFS has been constituted as an autonomous body under the RBI.

Board is drawn from the members of the Central Board of the Reserve Bank with the Governor as Chairman and one of the Deputy Governors as full time Vice-Chairman. The Board exercises the powers of supervision and inspection under the RBI Act, 1934 and the Banking Regulation Act, 1949 in relation to the different sectors of the financial system.

The BFS was initially given the mandate for supervision of commercial banks, Financial Institutions and NBFCs. Later, urban cooperative banks and primary dealers were also brought under the purview of the BFS. Since its formation, the BFS which meets every month, conducting on-site supervision of banks and off-site monitoring, based on quarterly reporting system.

  The main instrument of supervision in India is the periodical on-site inspection of banks that is supplemented by off-site monitoring and surveillance. Since 1995, on-site inspections are based on CAMELS (Capital adequacy, asset quality, management, earning, liquidity and systems and controls) model and aim at achieving the set objectives.

          The domestic banks are rated on CAMELS model while foreign banks are rated on CALCS model (capital adequacy, assets quality, liquidity, compliance and systems). The frequency of inspections is generally annual, which can be increased / reduced depending on the financial position, methods of operation and compliance record of the bank.