The Reserve Bank of India (RBI) has finalized the definition of the Upper Layer Non-Banking Financial Companies (NBFC-UL) and has kept the asset size threshold at Rs 1 lakh crore and above. The overhaul is targeted towards enhancing regulatory supervision of systemically important NBFCs and streamlining the classification framework.
Key Highlights
- RBI retains Rs 1 lakh crore asset threshold for identifying Upper Layer NBFCs nationwide today.
- Government-owned NBFCs included; infrastructure finance firms receive higher lending exposure limits.
Under the revised norms, an NBFC’s eligibility for Upper Layer classification will be determined based on its standalone audited balance sheet, prepared according to applicable accounting standards. The RBI clarified that entities with assets of Rs 1,00,000 crore or more will fall under the enhanced regulatory framework, with the threshold subject to review every three years.
Tata Sons Likely to Remain Under Upper Layer Framework
The decision could have significant implications for Tata Sons, which was categorized as an Upper Layer NBFC in 2022. As the RBI has not yet ruled on the company’s request to surrender its registration, Tata Sons is expected to remain under the Upper Layer framework for now. Its standalone asset base stood at approximately Rs 1.75 lakh crore as of March 2025, well above the prescribed threshold.
The central bank rejected industry suggestions to raise the threshold to Rs 2.5 lakh crore or link classification to additional factors such as profitability and asset quality. RBI stated that the Rs 1 lakh crore benchmark reflects the current structure of the NBFC sector and aligns with the financial profile of existing Upper Layer entities.
Also Read: RBI Issues Final Mis-Selling Rules for Banks and NBFCs: Check Details
Government-Owned NBFCs Included; Infrastructure Lending Norms Relaxed
In another key change, eligible government-owned NBFCs will now be included in the Upper Layer category, reinforcing RBI’s ownership-neutral regulatory approach. The regulator said this step is necessary given the growing interconnectedness of such institutions with the broader financial system.
To support infrastructure financing, the central bank has also increased the Large Exposure Framework (LEF) limit for Upper Layer Infrastructure Finance Companies (NBFC-IFCs). The threshold for a group of linked counterparties has been increased from 35% to 45% of the eligible capital base, lending flexibility in the provision of finance for large infrastructure projects.
The revised norms have been updated after considering feedback from the stakeholders on the draft norms released in April 2026 and are designed to bring in a transparent and simplified regulatory regime for large NBFCs in India.
