RBI Proposes ₹1 Lakh Crore Asset Threshold for Upper Layer NBFCs
The Reserve Bank of India has proposed a major overhaul in the classification of upper layer non-banking financial companies (NBFCs) by setting a clear asset size threshold of ₹1 lakh crore. According to the draft guidelines, any NBFC meeting this criterion based on its latest audited balance sheet will automatically be classified under the upper layer, replacing the current dual approach of size ranking and scoring methodology.
The central bank has also suggested including eligible government-owned NBFCs in the upper layer category under the revised framework, aligning with its objective of maintaining a neutral regulatory approach irrespective of ownership. Currently, such entities are placed in lower tiers. Additionally, the proposal allows upper layer NBFCs to use state government guarantees as a credit risk transfer tool without limits, subject to specified conditions.
The move is expected to simplify classification and improve transparency for stakeholders, potentially increasing the number of NBFCs in the upper layer beyond the existing 15 entities. The RBI has invited feedback on the draft guidelines until May 4, as part of its broader effort to refine the scale-based regulatory framework and strengthen oversight of large NBFCs.
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