New rules implemented for NBFCs in the ₹1 lakh crore club; RBI to shield the system from crashes..

Non-Banking Financial Companies (NBFCs) with assets of ₹1 lakh crore or more will be placed in the 'Upper Layer' category. A simpler and more concrete criterion will replace the existing method used to identify such companies. The Reserve Bank of India (RBI) stated that comprehensive regulations are required for NBFCs falling under the 'Upper Layer'. Changes to existing regulations are necessary following a review of the identification process for 'Upper Layer' NBFCs and the guidelines regarding the categorization of government-owned NBFCs. The central bank regulates NBFCs based on their size, risk profile, and systemic importance.

**Revised Regulations for NBFCs**
Under the scale-based regulatory framework, NBFCs are categorized into NBFC-Base Layer, NBFC-Middle Layer, NBFC-Upper Layer, and NBFC-Top Layer. According to the 'Reserve Bank (Registration, Exemptions, and Framework for Scale-Based Regulation for NBFCs) Second Amendment Directions, 2026', the 'Upper Layer' will comprise NBFCs specifically identified by the RBI each year that require stricter regulation. Regarding the identification criteria, it was stated that the 'Upper Layer' will include NBFCs with an asset size of ₹1,00,000 crore or more, based on the latest financial statements for the fiscal year.

**Review Every Three Years**
It was further stated that the criteria for identifying NBFCs in the 'Upper Layer' (UL) should be reviewed periodically. Additionally, the asset size threshold for identifying NBFCs in the 'Upper Layer' must be reviewed every three years. The central bank noted that NBFCs which are group entities of a commercial bank—and where both the NBFC and its parent bank engage in the same specific business or activity—must comply with the applicable regulations. According to the RBI, these regulations apply to NBFCs that are group entities of scheduled commercial banks, irrespective of their classification based on the tier structure under the provisions of these guidelines.

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