Introduction
In the past few decades, non-banking financial companies (NBFCs)
have played a very critical role in the growth of the Indian
financial services landscape. The NBFC eco-system has efficiently
supported the formal banking system by providing access to credit
and other financial services to various sections of the Indian
industry. Over the years, the Reserve Bank of India (RBI) has also
closely regulated the operations of NBFCs, and has been
rationalizing the applicability of stricter regulations based on
their asset size.
In January 2021, the RBI had mooted a new regulatory approach
for NBFCs through its discussion paper titled ‘Revised
Regulatory Framework for NBFCs - A Scale-based Approach'
(Discussion Paper). On 22 October 2021, the RBI issued a
notification on ‘Scale Based Regulation (SBR): A Revised
Regulatory Framework for NBFCs' (SBR Framework). The SBR
Framework will come into effect from 1 October 2022 (except for
certain compliance
