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ARTICLE · 31 OCTOBER 2023

New NBFC Regulatory Regime: Scale Based Regulation Directions 2023

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The Reserve Bank of India (RBI) published the Master Direction – Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions 2023 (SBR Master Directions) on 19 October 2023.

IndiaFinance and Banking
Vidushi Gupta
Vidushi Gupta
Prashanth Ramdas
Prashanth Ramdas
Diksha Singh
Diksha Singh
Pritali Patil
Pritali Patil
Shriya Kamat
Shriya Kamat
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INTRODUCTION

The Reserve Bank of India (RBI) published the Master Direction – Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions 2023 (SBR Master Directions) on 19 October 2023. The SBR Master Directions brings an end to the basic categorisation of NBFCs into systemically important and non-systemically important NBFCs.

The SBR Master Directions have been issued in supersession of the: (i) Non-Banking Financial Company–Non-Systemically Important Non-Deposit taking (Reserve Bank) Directions, 2016, and (ii) Non-Banking Financial Company–Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 (collectively, the Erstwhile Regulatory Regime). The SBR Master Directions bring about the long-awaited harmonisation of the Erstwhile Regulatory Regime with the Scale Based Regulation framework for NBFCs, published by the RBI on 22 October 2021 and effective from 1 October 2022 (SBR

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