Scale Based Regulation For NBFCs

A revised regulatory framework ("Framework") has been announced by RBI that shall be applicable to all non-banking financial companies ("NBFCs").

The key highlights of the Framework are as follows:

1) The regulatory structure for NBFC's has been categorised into four layers based on their size, activity, and perceived riskiness: NBFC - Base Layer (NBFC-BL), NBFC - Middle Layer (NBFC-ML) and NBFC - Upper Layer (NBFC-UL). The Top Layer is ideally expected to be empty and will be known as NBFC - Top Layer (NBFC-TL).

2) Regulatory minimum net owned fund requirement for NBFC-ICC, NBFC-MFI and NBFC factors is increased to INR 10,00,00,000 (Rupees Ten Crores only) to be achieved via glide path by March 31, 2027.