“We are coming up with a new framework for categorisation of NBFCs into upper, middle layer probably before the end of this month,” RBI governor said responding to a question without giving any details.
The RBI had initiated a review of its scale-based regulation (SBR) framework for NBFCs, to fine-tune oversight as the sector expands in size and complexity, according to the Report on Trends and Progress of Banking in India released in December 2025.
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“The scale-based regulation framework for NBFCs envisages a differential regulatory treatment to NBFCs not availing public funds and not having a customer interface. Towards this initiative, a review of the extant regulations is underway,” the RBI had said in the report.
Under the SBR framework, NBFCs are subject to differentiated regulation based on their scale, risk profile and systemic importance. As of end-March 2025, 15 NBFCs—including four housing finance companies (HFCs)—were classified in the upper layer (NBFC-UL), which is subject to more stringent regulatory requirements compared with entities in the middle layer (NBFC-ML) and base layer (NBFC-BL).
Also Read| India’s central bank sounds alarm with five risks from Iran war for India’s stabilityAs of March 2025, 15 upper-layer NBFCs accounted for 30.2% of total assets of the sector. NBFCs in the middle layer held the largest share at 64.6%, largely due to the presence of government-owned entities, while base-layer NBFCs accounted for just 5.2% of total assets, despite being the largest segment in terms of number of entities.
Tata Sons, the holding company for the conglomerate, had requested to de-register as an upper layer NBFC, giving it an exemption from mandatory listing the deadline for which was September 2025. The regulator has not officially commented on this request yet.