RBI releases list of upper layer NBCs for FY 2023- 24

The Reserve Bank of India (RBI) finally released the list of non-banking finance companies (NBFCs) in the upper layer under scale based regulation for NBFCs for the current year 2023-24.

The Reserve Bank of India (RBI) on September 14th i.e Thursday finally released the list of non-banking finance companies (NBFCs) in the upper layer under scale based regulation for NBFCs for the current year 2023-24. The list as for now has 15 companies that include LIC Housing Finance, Bajaj Finance, Shriram Finance and Tata Sons Pvt Ltd among others.

The RBI recently issued the Scale Based Regulation (SBR) on October 22nd , 2021. The framework categorises NBFCs in base layer, middle layer, upper layer and top layer. The regulation successfully provides the methodology to identify the NBFCs in the Upper Layer according their asset size and scoring methodology. Once an NBFC is classified as NBFC-UL, it will be exposed to enhanced regulatory requirement at least for a period of five years from its classification in the layer even if it ceases meet the parametric criteria in the future years. Other companies in the list include L&T Finance, Piramal Capital, Cholamandalam Finance, Indiabulls Housing, Mahindra and Mahindra Financial services, Tata Capital Financial Services and PNB Housing Finance. Apart from that , HDB Financial services, Aditya Birla Finance, Muthoot Finance and Bajaj Housing Finance are also part of the list. Even though after crossing the qualifying for identification as NBFC-UL as per scoring methodology, 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, the RBI informed.

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The base layer shall consist of a non-deposit taking NBFCs below the asset size of Rs1000 crore while the middle layer will have asset size of Rs1000 crores and above. The upper layer typically include those NBFCs which are specifically identified by the RBI as warranting enhanced regulatory requirement based on a set of parameters. The top layer is supposed to remain empty.