Why in the news
The central bank issued final, revised norms that replace the old scoring approach with one simple size test for the top tier of non-bank lenders. The change makes a public listing of Tata Sons hard to avoid.
Key facts
- Issued: 24 June 2026, effective immediately, under Sections 45-IA, 45JA, 45L and 45M of the RBI Act, 1934.
- NBFC-UL test: asset size of Rs.1 lakh crore or above; replaces multi-parameter scoring.
- Industry ask of Rs.2.5 lakh crore was rejected; RBI calls asset size a reasonably good proxy for systemic significance.
- Review of the threshold every 3 years; identification is annual.
What changes
| Area | New position |
|---|
| Listing | Mandatory within 3 years of becoming NBFC-UL |
| Government-owned NBFCs | Exempt from listing because of developmental mandate |
| Concentration-risk relief for government NBFCs | Withdrawn; they now face the same exposure rules as private NBFCs |
| Bank-owned NBFCs | Follow commercial bank norms for same activities; keep SBR layer classification, curbing regulatory arbitrage |
| NBFC-IFC large exposure limit | Ceiling lifted from 35% to 45% of eligible capital |
| Oversight | Closer checks on CET-1 capital, liquidity coverage, exposures, stress testing and disclosure |
Scale-Based Regulation (SBR)
- Risk-based four-layer framework, issued 22 October 2021 and effective 1 October 2022; it sets capital, governance, prudential, large exposure and disclosure standards by size, activity and systemic importance.
| Layer | Criteria |
|---|
| Base (NBFC-BL) | Assets below Rs.1,000 crore; non-deposit, non-systemic |
| Middle (NBFC-ML) | Assets Rs.1,000 crore or more, or deposit-taking, or systemic |
| Upper (NBFC-UL) | Assets Rs.1 lakh crore or more (June 2026 norm) |
| Top (NBFC-TL) | At RBI’s discretion; currently empty |
About NBFCs and the RBI Act
- An NBFC is a company registered under the Companies Act that lends, invests, leases and so on but holds no banking licence; it cannot take demand deposits, is outside the payment system and has no deposit insurance. Around 9,500 are registered.
- Chapter III-B of the RBI Act governs NBFCs: 45-I defines NBFC; 45-IA sets registration and Net Owned Funds; 45-IB liquid assets; 45-IC reserve fund of 20% of net profit; 45-JA policy powers; 45-L information and directions; 45-M statements.
Core Investment Companies and Tata Sons
- A CIC is an NBFC holding at least 90% of net assets in group company securities or loans, minimum asset size Rs.100 crore, under the Master Direction on CICs, 2016. Examples: Tata Sons, Bajaj Holdings, L&T Holdings.
- Tata Sons: CIC with standalone assets of about Rs.1.75-1.9 lakh crore; first named NBFC-UL in September 2022; missed the 30 September 2025 listing deadline; deregistration plea of 2024 pending after repaying over Rs.20,000 crore debt; the only unlisted name on the earlier UL list.
Sector snapshot
| Metric | Value |
|---|
| NBFCs registered | About 9,500 |
| Sector assets | About Rs.47 lakh crore |
| Share of total credit | About 12.5% |
| CRAR | About 26% (15% required) |
| GNPA | About 3.0% |
| NBFC-UL list | 15 entities |
Key terms
- CET-1: top-quality capital; 9% requirement for NBFC-UL.
- CRAR: minimum 15% for NBFCs.
- LCR: high-quality liquid assets against 30-day net outflows; 100% target for NBFC-UL.
- LEF: cap on exposure to one counterparty or group.
Exam angle
- Threshold: Rs.1 lakh crore; reviewed every 3 years.
- Top Layer is empty; listing deadline 3 years.
- LEF for NBFC-IFC: 35% to 45%.