Identified NBFC-UL are now subjected to enhanced regulations for at least 5 years like mandatory listing within 3 years of identification.
About Scale Based regulation for NBFCs
Implemented by RBI, it categorizes NBFCs into four distinct layers based on their systemic importance, size and perceived level of risk.
- Base Layer (NBFC-BL): Consists of non-deposit taking NBFCs (NBFC-ND) with assets below ₹1,000 crore.
- Includes specific entities like Peer-to-Peer (P2P) lending platforms, Account Aggregators (AA), Non-Operative Financial Holding Company.
- Middle Layer (NBFC-ML): Includes all deposit-taking NBFCs regardless of asset size and non deposit taking NBFCs with assets of ₹1,000 crore and above.
- Also includes specific entities like Infrastructure Debt Fund NBFC, Core Investment Company (CIC), Housing Finance Company, and NBFC-Infrastructure Finance Company.
- It accounts for the largest share of 64.6% of total NBFC assets.
- Upper Layer (NBFC-UL): NBFCs annually identified by RBI and having asset size of ₹1,00,000 crore and above.
- Top Layer (NBFC-TL): Ideally to be remain empty but if there is substantial increase in the potential systemic risk from specific NBFC-UL, such NBFC-UL will move to top layer.
