The Reserve Bank of India (RBI) has introduced revised directions for identifying non-banking financial companies (NBFCs) in the upper-layer category, significantly changing the earlier framework that relied on a parametric scoring system.
The previous method assessed NBFCs based on factors such as size, interconnectedness and operational complexity.
Under the new rules, the RBI will now use a clear asset-size threshold of ₹1 lakh crore and above to determine whether an NBFC should be considered for inclusion in the upper-layer classification.
This marks a shift towards a more objective, size-based approach rather than a composite scoring model.
The revised framework places renewed focus on Tata Sons, the holding company of the Tata Group, which is registered as a core investment company (CIC).
Tata Sons holds assets well above the newly defined threshold and had earlier been placed in the upper-layer NBFC list in 2022.
As per earlier timelines, it was expected to move towards stock market listing by 2025.
The company had also sought cancellation of its CIC registration to avoid mandatory listing requirements, a matter that remains under regulatory consideration.
According to the RBI, the ₹1 lakh crore asset threshold will now be reviewed every three years instead of every five years as proposed in the draft guidelines. The norms came into effect immediately on June 24.
Alongside the classification changes, the central bank has also revised exposure norms for infrastructure finance companies (IFCs), which fall under the upper-layer NBFC category.
The large exposure limit for such NBFC-IFCs has been increased from 35% to 45% of their capital base, providing greater flexibility in lending operations.
In addition, the RBI clarified that government-owned NBFCs that qualify under the criteria may be included in the upper-layer category.
However, such government-owned NBFCs will not be subject to mandatory stock exchange listing requirements, distinguishing them from private-sector entities.
