Reserve Bank of India (RBI) simplifies Non-Banking Financial Company (NBFC) Upper Layer identification framework

Key facts

• The Reserve Bank of India (RBI) has established an asset size of ₹1 lakh crore and above as the sole criterion for classifying Non-Banking Financial Companies in the Upper Layer (NBFC-UL).
• The revised Scale Based Regulatory (SBR) framework replaces the earlier methodology involving parametric scoring and supervisory assessments for identifying systemically important NBFCs.
• The RBI has mandated that the ₹1 lakh crore asset threshold for NBFC-UL classification will be reviewed every three years.
• Fully owned and controlled government NBFC-ULs are exempted from certain governance and financial disclosure requirements under the new guidelines.
• NBFC group entities of Scheduled Commercial Banks (SCBs) must comply with the RBI (Commercial Banks – Undertaking of Financial Services) Directions, 2025, when performing the same financial activities as the parent bank.