Why in the news
The RBI issued final revised norms on registration of, and exemptions for, NBFCs. They make it easier to identify Upper Layer NBFCs under Scale-Based Regulation and tighten rules for government-owned and bank-group NBFCs.
Key changes
| Area | Earlier | Revised (24 June 2026) |
|---|
| Upper Layer test | Parametric scoring plus top 10 by asset size | Assets of ₹1 lakh crore (₹1 trillion) or more |
| Government-owned NBFC concentration risk | Exempt | Same limits as other NBFCs in their layer |
| Bank-group NBFCs | Rules of their SBR layer | Commercial bank norms where activity matches parent bank |
| NBFC-IFC group exposure limit | 35% | 45% of eligible capital base |
| Review of threshold | None | Every 3 years |
Key facts
- Assets are judged on the latest audited balance sheet; identification is annual.
- An Upper Layer NBFC must list within 3 years of being identified; government-owned ones keep the listing exemption.
- Enhanced oversight covers CET1 capital, LCR, exposure norms, stress tests and disclosures.
- Government-owned NBFCs may now fall in any layer according to asset size.
- Bank-group NBFCs keep their existing layer, and the aim is to curb regulatory arbitrage; an IDF-NBFC in a bank group stays in the Middle Layer yet follows Upper Layer rules.
Scale-Based Regulation
A risk-based framework announced on 22 October 2021 and effective 1 October 2022, sorting NBFCs into four layers by size, activity and perceived risk under the RBI Act, 1934.
| Layer | Criteria |
|---|
| Base | Below ₹1,000 crore, non-deposit-taking (e.g. NBFC-P2P, NBFC-AA, NOFHC) |
| Middle | ₹1,000 crore to ₹1 lakh crore, plus deposit-taking NBFCs, CICs, IFCs, HFCs, IDFs, SPDs |
| Upper | ₹1 lakh crore and above |
| Top | Discretionary; ideally empty, used only if RBI sees major systemic risk in the Upper Layer |
Exposure limits
| Layer | Single counterparty | Connected group |
|---|
| Middle | 15% of Tier I | 25% of Tier I |
| Upper | 20% of Tier I | 25% of Tier I |
| Upper (IFC) | 25% of Tier I | 45% of eligible capital base (earlier 35%) |
Background terms
- NBFC-IFC: puts at least 75% of assets in infrastructure loans; minimum NOF ₹300 crore; CRAR of 15% with Tier I at least 10%; investment-grade rating needed. Examples: REC, PFC, IIFCL, IREDA, IRFC, L&T Finance.
- CIC: holds at least 90% of net assets as investments in group companies; minimum ₹100 crore; examples Tata Sons and Bajaj Holdings.
- NBFC: company under the Companies Act that lends, invests, leases or does hire-purchase without a banking licence; cannot take demand deposits; no deposit insurance; about 9,500 registered; governed by RBI Act, 1934 Chapter III-B.
Exam angle
- Upper Layer cut-off: ₹1 lakh crore; review gap: 3 years.
- SBR layers: Base, Middle, Upper, Top.
- IFC group exposure limit moved from 35% to 45%.