RBI says 15 large NBFCs to comply with enhanced regulatory requirements in FY24

Reserve Bank of India on Thursday said 15 large non-banking financial corporations (NBFC), including LIC Housing Finance, Bajaj Finance, Shriram Finance and Tata Sons, will be subject to enhanced regulatory requirements in FY24.

The central bank has categorised NBFCs into Base Layer (NBFC-BL), Middle Layer (NBFC-ML), Upper Layer (NBFC-UL) and Top Layer (NBFC-TL).

A list of 15 large Non Banking Finance Companies (NBFCs) falling in the Upper Layer category has been released.

Besides LIC Housing Finance, Bajaj Finance, Shriram Finance and Tata Sons, others in the list include L&T Finance, Piramal Capital & Housing Finance, Cholamandalam Investment and Finance Company.

Indiabulls Housing Finance, Mahindra & Mahindra Financial Services, Tata Capital Financial Services, PNB Housing Finance, HDB Financial Services, Aditya Birla Finance, Muthoot Finance and Bajaj Housing Finance are also part of the list.

According to RBI, despite qualifying for identification as NBFC-UL as per scoring methodology, TMF Business Services Ltd (formerly Tata Motors Finance Limited) is not being included in the list of NBFC-UL in the current review due to its ongoing business reorganisation.

There is a prescribed methodology to identify the NBFCs in the Upper Layer as per their asset size and scoring methodology.

In terms of the 'Scale Based Regulation (SBR): A Revised Regulatory Framework for NBFCs' issued in October 2021, once an NBFC is classified as NBFC-UL, it will be subject to enhanced regulatory requirement. This will be for at least for a period of five years from its classification in the layer, even in case it does not meet the parametric criteria in the subsequent year/s.