RBI moots INR-1-tln asset size for classification of NBFCs as upper layer
This story was originally published at 18:43 IST on 10 April 2026
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--RBI issues draft norm on review of NBFC-upper layer identification process
--RBI seeks comments on NBFC-upper layer identification review norm by May 4
--RBI: Propose to consider govt-owned NBFCs in list of upper-layer NBFCs
--RBI: Propose upper layer NBFCs to use state guarantees as credit risk tool
--RBI: Moot INR 1 tln asset size criteria for upper-layer NBFC classification
MUMBAI – The Reserve Bank of India Friday proposed an overhaul of the framework for identifying upper-layer non-banking financial companies, mooting an asset size threshold of INR 1 trillion as the primary criterion for classification, as part of the draft amendment released for public consultation.
Under the proposed changes, NBFCs with an asset size of INR 1 trillion and above, based on their latest audited balance sheet, would automatically qualify for inclusion in the upper layer, replacing the existing methodology that combines a list of top entities by size with a parametric scoring approach.
The central bank said the move is aimed at simplifying and enhancing transparency in the identification process, which is currently based on a two-pronged system involving the top 10 eligible NBFCs and a scoring framework.
The RBI has also proposed that the asset size threshold for upper layer classification be reviewed every five years, ensuring that the framework remains aligned with the evolving size and complexity of the sector. Additionally, the criteria for identifying upper-layer NBFCs will be reviewed periodically, reinforcing regulatory flexibility in response to market developments, the RBI said.
In a notable shift, the RBI has proposed to include government-owned NBFCs in the upper layer classification, marking a departure from the current framework where such entities are placed in the base or middle layers.
The central bank said the proposal is guided by the principle of a "ownership-neutral regulatory regime", implying that regulatory treatment should not differ based on whether an NBFC is privately or government owned.
Separately, the RBI has proposed easing concentration risk norms for upper-layer NBFCs by allowing them to use state government guarantees as a credit risk mitigation tool without any cap. Under the draft amendments to the concentration risk management directions, exposures backed by state government guarantees would attract a 20% risk weight, and such exposures could be shifted to the state government to the extent the guarantee is invoked. The regulator has not prescribed any limit on such risk transfers, potentially giving large NBFCs greater flexibility in managing concentration risks.
The RBI has invited comments from stakeholders, including NBFCs and the public, on the proposed changes by May 4. End
Reported by Kabir Sharma
Edited by Akul Nishant Akhoury
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