RBI Announced Top 15 NBFCs Under the Upper Layer

The Reserve Bank of India (RBI) announced a notification on September 14th, 2023 about a list of the top 15 NBFCs. This list includes 15 non-banking financial companies placed under the upper layer per the scale-based regulation for 2023-24.

On October 22, 2021, the RBI issued a Scale Based Regulation: A Revised Regulatory Framework for NBFCs. In this framework, the categorisation of NBFCs is given which is divided into four layers: 

1. Base Layer (NBFC-BL)
2. Middle Layer (NBFC-ML)
3. Upper Layer (NBFC-UL)
4. Top Layer (NBFC-TL)

The Upper Layer must comprise those NBFCs which are specifically identified by the Reserve Bank as warranting enhanced regulatory requirements based on a set of parameters. Check the detailed categorisation of NBFC here.

The TMF Business Services Limited (formerly Tata Motors Finance Limited) is not being included in the list of NBFC-UL in the current review due to its ongoing business reorganisation. This is done to create an equal qualification for identification as NBFC-UL.

Scoring Methodology for NBFC Upper Layer

The scoring methodology for identification of an NBFC as NBFC-UL must be based

on the set of NBFCs fulfilling the following criteria:

• Top 50 NBFCs (excluding top ten NBFCs based on asset size, which automatically falls in the Upper Layer) based on their total exposure including credit equivalent of off-balance sheet exposure.
• NBFCs were designated as NBFC-UL in the previous year.
• NBFCs are added to the set by supervisors using supervisory judgment.

In terms of the framework, once an NBFC is classified as NBFC-UL, it must be subject to enhanced regulatory requirements, at least for a period of five years from its classification in the layer, even in case it does not meet the parametric criteria in the subsequent year/s.

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Author: Dushyant Sharma

Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.