RBI Announced Top 15 NBFCs Under the Upper Layer

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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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