RBI categorises 16 large financial entities as upper-layer NBFCs

Mumbai: The Reserve Bank on Friday categorised 16 big non-banking financial companies, including LIC Housing Finance and Bajaj Finance, as upper-layer NBFCs that will be subject to an enhanced regulatory framework.

The RBI in October 2021 announced to put in place a four-layered regulatory structure for non-banking financial companies (NBFCs) to keep a stricter vigil on the shadow banking sector and minimise risks for the overall financial system.

The detailed set of norms provides for a Scale Based Regulation (SBR) framework that takes into consideration capital requirements, governance standards, prudential regulation and other aspects of NBFCs.

The framework categorises NBFCs in Base Layer (NBFC-BL), Middle Layer (NBFC-ML), Upper Layer (NBFC-UL) and Top Layer (NBFC-TL).

In a statement, the RBI said it has identified 16 NBFCs for categorisation as NBFC-UL under the framework.

However, HDFC Limited has not been included in the list of Upper Layer (NBFC-UL) in the current review due to the ongoing merger process, the RBI said. HDFC is in process of merging with its subsidiary HDFC Bank.

The 16 NBFCs include LIC Housing Finance; Bajaj Finance; Shriram Transport Finance Company; Tata Sons; L & T Finance; Indiabulls Housing Finance; Piramal Capital & Housing Finance, etc.