RBI proposes Rs 1 lakh crore asset mark for classifying upper layer NBFCs
Eligible government-owned NBFCs are also proposed to be included in the upper layer list based on the revised framework.
- Apr 10, 2026,
- Updated Apr 10, 2026 7:40 PM IST
The Reserve Bank of India (RBI) has released draft directions aimed at reviewing scale-based regulation framework for upper layer non-banking finance companies (NBFC). Under the draft amendments, those NBFCs having asset size of Rs 1 lakh crore and above as per the latest audited balance sheet for the financial year will be considered upper layer NBFCs.
“There is a need to amend the directions based on a review of instructions pertaining to methodology for identification of NBFCs in the upper layer and placement of government owned NBFCs in various layers as envisaged under the Scale Based Regulatory Framework for NBFCs,” RBI said on April 10.
As of March 2025-end, the Reserve Bank had classified 15 NBFCs designated as upper layer, which included Tata Sons, which has been classified as a core investment company.
The other upper layer NBFCs in the list included deposit taking companies – LIC Housing Finance, Bajaj Finance, Shriram Finance, Mahindra and Mahindra Financial Services and PNB Housing Finance. Cholamandalam Investment and Finance Company, L&T Finance, Aditya Birla Finance, Tata Capital, Piramal Capital, HDB Financial Services, Sammaan Capital, Muthoot Finance and Bajaj Housing Finance were the non-deposit taking NBFCs in the upper layer list.
“The Scale Based Regulatory framework for NBFCs prescribes a two-pronged methodology for identification of NBFC-UL viz., top ten eligible NBFCs by asset size and parametric scoring methodology. With a view to adopt a transparent, simple and absolute criteria for identification of NBFC-UL, it is proposed to replace the existing methodology with asset size criteria, which is currently proposed as Rs 1,00,000 crore and above,” RBI said.
Importantly, as of now, the framework places government-owned NBFCs in the base layer or middle layer and not in the upper layer. RBI said that in pursuance of the principle of ownership neutral regulatory regime for NBFCs, eligible government-owned NBFCs are also proposed to be included in the upper layer list based on the revised criteria.
It has also been proposed to allow all upper layer NBFCs to use state government guarantees as credit risk transfer instrument without any limit subject to the specified conditions.
AM Karthik, senior vice-president and co-group head financial sector ratings at ratings agency ICRA feels the proposal to identify upper layer NBFCs by the asset size criteria will provide clarity to all stakeholders.
“Further, inclusion of government-owned entities too, based on their size, indicates a more harmonised way of identifying NBFC-UL. Based on the existing position, the number of NBFC-UL would go up vis-à-vis 15 entities identified previously,” said Karthik.
RBI Governor Sanjay Malhotra had said on April 8 after the monetary policy announcement that the RBI would soon come out with a scale-based framework for categorisation of NBFCs.
Under existing guidelines, all upper layer NBFCs had to list on stock exchanges. Tata Sons had to list by September 30. While, that deadline has long passed, there has been no clarity from RBI on its status yet. The clarification will be crucial for Tata Sons, the holding company of the salt to software Tata conglomerate.
RBI has invited feedback on the draft directions from NBFCs and other stakeholders till May 4.
The Reserve Bank of India (RBI) has released draft directions aimed at reviewing scale-based regulation framework for upper layer non-banking finance companies (NBFC). Under the draft amendments, those NBFCs having asset size of Rs 1 lakh crore and above as per the latest audited balance sheet for the financial year will be considered upper layer NBFCs.
“There is a need to amend the directions based on a review of instructions pertaining to methodology for identification of NBFCs in the upper layer and placement of government owned NBFCs in various layers as envisaged under the Scale Based Regulatory Framework for NBFCs,” RBI said on April 10.
As of March 2025-end, the Reserve Bank had classified 15 NBFCs designated as upper layer, which included Tata Sons, which has been classified as a core investment company.
The other upper layer NBFCs in the list included deposit taking companies – LIC Housing Finance, Bajaj Finance, Shriram Finance, Mahindra and Mahindra Financial Services and PNB Housing Finance. Cholamandalam Investment and Finance Company, L&T Finance, Aditya Birla Finance, Tata Capital, Piramal Capital, HDB Financial Services, Sammaan Capital, Muthoot Finance and Bajaj Housing Finance were the non-deposit taking NBFCs in the upper layer list.
“The Scale Based Regulatory framework for NBFCs prescribes a two-pronged methodology for identification of NBFC-UL viz., top ten eligible NBFCs by asset size and parametric scoring methodology. With a view to adopt a transparent, simple and absolute criteria for identification of NBFC-UL, it is proposed to replace the existing methodology with asset size criteria, which is currently proposed as Rs 1,00,000 crore and above,” RBI said.
Importantly, as of now, the framework places government-owned NBFCs in the base layer or middle layer and not in the upper layer. RBI said that in pursuance of the principle of ownership neutral regulatory regime for NBFCs, eligible government-owned NBFCs are also proposed to be included in the upper layer list based on the revised criteria.
It has also been proposed to allow all upper layer NBFCs to use state government guarantees as credit risk transfer instrument without any limit subject to the specified conditions.
AM Karthik, senior vice-president and co-group head financial sector ratings at ratings agency ICRA feels the proposal to identify upper layer NBFCs by the asset size criteria will provide clarity to all stakeholders.
“Further, inclusion of government-owned entities too, based on their size, indicates a more harmonised way of identifying NBFC-UL. Based on the existing position, the number of NBFC-UL would go up vis-à-vis 15 entities identified previously,” said Karthik.
RBI Governor Sanjay Malhotra had said on April 8 after the monetary policy announcement that the RBI would soon come out with a scale-based framework for categorisation of NBFCs.
Under existing guidelines, all upper layer NBFCs had to list on stock exchanges. Tata Sons had to list by September 30. While, that deadline has long passed, there has been no clarity from RBI on its status yet. The clarification will be crucial for Tata Sons, the holding company of the salt to software Tata conglomerate.
RBI has invited feedback on the draft directions from NBFCs and other stakeholders till May 4.