The Reserve Bank of India (RBI) has released the list of 15 Non-Banking Financial Companies (NBFCs) that have been categorized as Upper Layer (NBFC-UL) for the year 2024-25. The list includes prominent names such as LIC Housing Finance, Bajaj Finance, Tata Sons Private Limited, and Muthoot Finance Limited. The Upper Layer classification is based on the Size-Based Regulation (SBR) framework, which classifies NBFCs into four layers – Base Layer, Middle Layer, Upper Layer, and Top Layer – based on their asset size and a scoring methodology.
The NBFCs in the Upper Layer are subject to enhanced regulatory requirements for a minimum of five years, even if they fail to meet the criteria in subsequent reviews. The list includes major NBFCs by asset size, as well as those that have qualified through the scoring methodology. However, the inclusion of Tata Sons Private Limited is subject to the outcome of its application for de-registration, which is currently under examination.
Piramal Enterprises Limited, which had qualified for inclusion based on the scoring methodology, has been excluded from the list due to ongoing group reorganization. The RBI has clarified that the exclusion of Piramal Enterprises Limited is due to the ongoing reorganization in the business group, and not due to any non-compliance with the SBR framework.
The SBR framework is designed to identify and regulate NBFCs based on their asset size and creditworthiness. The framework is aimed at enhancing the stability and resilience of the financial system by subjecting NBFCs to stricter regulatory requirements if they pose a higher risk to the financial system.