The Reserve Bank of India (RBI) has proposed a simpler way to identify and regulate large non-banking financial companies (NBFCs), in a move aimed at improving clarity and strengthening oversight.
In a draft framework released for public feedback, the RBI has suggested that NBFCs with assets of ₹1 lakh crore or more should automatically be placed in the “upper layer.” These are the biggest and most systemically important firms, and they are subject to tighter regulations.
Right now, NBFCs are classified using a mix of factors such as size, risk level and their connections with other financial institutions. This system can be complex and difficult to follow. By introducing a clear asset-based threshold, the RBI hopes to make the process more straightforward and transparent.
Another important change proposed is treating government-owned NBFCs the same as private ones. Until now, many state-run NBFCs were placed in lower regulatory categories. The RBI’s new approach removes this distinction, ensuring that any company—public or private—that meets the size requirement will face the same level of scrutiny.
This shift could bring more large NBFCs under stricter supervision. Companies classified in the upper layer are expected to follow tighter governance norms, improve risk management practices, and may also face requirements such as listing on stock exchanges.
The proposal could impact several large financial entities and corporate groups, potentially increasing compliance responsibilities for them. However, regulators believe this is necessary to maintain stability in the financial system, especially as NBFCs play a growing role in lending and financial services.