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Informist, Wednesday, Jun. 24, 2026

 

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--RBI issues norms on review of method to identify upper-layer NBFC 
--RBI issues norms to review method of including PSU NBFCs in upper-layer 
--RBI issues credit, investment concentration norms for PSU NBFCs 
--RBI finalises INR 1 tln asset size criteria for upper layer NBFCs 
--RBI: To review NBFC upper layer asset size threshold every 3 years 
--RBI: Listing not mandatory for fully govt-owned upper layer NBFCs

 

NEW DELHI – The Reserve Bank of India Wednesday finalised an INR-1-trillion and above asset size criteria for identification of non-banking financial companies in the upper layer, calling it a transparent and simple criteria. This replaces the previous methodology that combined a list of top entities by size with a parametric scoring approach. 

 

Any NBFC having asset size of INR 1 trillion and above as per the latest audited balance sheet for the financial year will be part of the upper layer, the RBI said. The RBI will identify upper layer NBFCs annually based on the asset size criteria. The central bank rejected feedback which suggested a higher asset size threshold of INR 2.5 trillion for upper layer NBFC classification.

 

Regulatory structure for NBFCs has four layers based on their size, activity, and perceived riskiness. NBFCs in the upper layer warrant enhanced regulatory requirement. The top layer is ideally expected to be empty but can can be populated if the RBI perceives substantial increase in the potential systemic risk from specific NBFCs in the upper layer.

 

The asset size threshold for identification of upper-layer NBFCs will be reviewed every three years, the RBI said in the final norms. In the draft norms released Apr. 10, the RBI has proposed a five-year review of the asset size criteria.

 

In the new norms, government-owned NBFCs meeting the asset size threshold will be included in the upper layer classification, marking a departure from the previous framework where such entities are placed in the base or middle layers. "Eligible Government NBFCs will be included in NBFC-UL (upper layer) in view of their interconnectedness with the financial system and in pursuance of the principle of ownership-neutral regulatory regime for NBFCs," the RBI said. 

 

The RBI also decided that listing will not be mandatory for upper layer NBFCs that are fully owned and controlled by the government. This is in view of developmental mandate which may require retaining a complete government ownership in certain NBFCs.

 

The central bank increased the large exposure framework limits for group of connected counterparties of upper layer NBFC-Infrastructure Finance Companies to 45% of eligible capital base from from 35?rlier.

 

The exposure framework limit was raised "considering the specialized nature of NBFC-IFC" and the "needs of infrastructure sector and to avoid adverse impact on existing infrastructure projects", the RBI said.

 

Separately, the RBI also eased 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 final concentration risk management directions, exposures backed by state government guarantees would attract a 20% risk weight.  End

 

Reported by Shubham Rana

Edited by Akul Nishant Akhoury

 

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