Vide , RBI/2021-22/112 DOR.CRE.REC. No.60/03.10.001/2021-22 circular dated October 22, 2021,  All Non-Banking Financial Companies will be  regulated through a framework called Scale Based Regulation (SBR) framework

These guidelines shall be effective from October 01, 2022, except the Ceiling on IPO Funding –, which is in effect from April 01, 2022- There is a ceiling of ₹1 crore per borrower for financing subscription to Initial Public Offer (IPO). NBFCs can fix more conservative limits.


Based on their size, activity, and perceived riskiness NBFC are Classified in to four layers:-

NBFC Base Layer (NBFC-BL).

NBFC – Middle Layer (NBFC-ML)

NBFC – Upper Layer (NBFC-UL) and

NBFC – Top Layer (NBFC-TL) – This Layer is ideally expected to be empty. 

Base Layer:

  • non-deposit taking NBFCs below the asset size of ₹1000 crore

NBFCs can undertake the following activities-

  • NBFC-Peer to Peer Lending Platform (NBFC-P2P) – is a type of Non-Banking Financial Company which carries on the business of providing services of Loan facilitation to willing lenders and borrowers through online platform. Few examples are – LenDen Club, Finzy, Faircent, Lendingkart, Rupee Circle and Paisa Dukaan etc.

This type of Non-Banking Financial Company is not allowed to accept deposits or lend on its own.

  • NBFC-Account Aggregator (NBFC-AA)- are entities that enable sharing of data across multiple financial sector organizations and act as “consent brokers”, i.e., the intermediate data transfer among the financial organizations with the consent of the user. Few Examples are Axis, ICICI, HDFC, and IndusInd Banks
  • Non-Operative Financial Holding Company (NOFHC)- Non-Operative Financial Holding Company (NOFHC) means a non-deposit taking NBFC which holds the shares of a banking company and the shares of all other financial services companies in its group, whether regulated by Reserve Bank or by any other financial regulator, to the extent permissible under the applicable. Example is -BANDHAN FINANCIAL HOLDINGS LIMITED.


  • NBFCs not availing public funds and not having any customer interface

Middle Layer: – The Middle Layer shall consist of: 

(a) All deposit taking NBFCs (NBFC-Ds), irrespective of asset size,

(b) Non-deposit taking NBFCs with asset size of ₹1000 crore and above and

(c) NBFCs undertaking the following activities

  • Standalone Primary Dealers (SPDs) – means a Non-Banking Financial Company (NBFC) that holds a valid letter of authorization as a PD issued by the Reserve Bank, in terms of the “Guidelines for Primary Dealer in Government Securities Market”.
  • Infrastructure Debt Fund – Non-Banking Financial Companies (IDF-NBFCs)- IDFs are investment vehicles which can be sponsored by commercial banks and NBFCs in India in which domestic/offshore institutional investors, specially insurance and pension funds can invest through units and bonds issued by the IDFs.
  • Core Investment Companies (CICs)- A Core Investment Company (CIC) is a Non-Banking Financial Company (NBFC) which carries on the business of acquisition of shares and securities and holds not less than 90% of its net assets in the form of investment in equity shares, preference shares, bonds, debentures, debt or loans in group companies.
  • Housing Finance Companies (HFCs) – shall mean a company incorporated under the Companies Act, 2013, whose financial assets, in the business of providing finance for housing, constitute at least 60% of its total assets (netted off by intangible assets)
  • Infrastructure Finance Companies (NBFC-IFCs) – is defined as a Non-Banking Financial Company if;a minimum of 75 percent of its total assets shall deploy in infrastructure loan.

Upper Layer:

The Upper Layer shall comprise of those NBFCs which are specifically identified by the Reserve Bank as warranting enhanced regulatory requirement based on a set of parameters and scoring methodology as provided in the RBI circular.

The top ten eligible NBFCs in terms of their asset size shall always reside in the upper layer, irrespective of any other factor 

The Top Layer:

Will ideally remain empty. This layer can get populated if the Reserve Bank is of the opinion that there is a substantial increase in the potential systemic risk from specific NBFCs in the Upper Layer. Such NBFCs shall move to the Top Layer from the Upper Layer.



a) NBFC-P2P, NBFC-AA, NOFHC and NBFCs without public funds and customer interface will always remain in the Base Layer of the regulatory structure.

b) NBFC-D, CIC, IFC and HFC will be included in Middle Layer or the Upper Layer (and not in the Base layer), as the case may be. SPD and IDF-NBFC will always remain in the Middle Layer.

c) The remaining NBFCs, viz., Investment and Credit Companies (NBFC-ICC), Micro Finance Institution (NBFC-MFI), NBFC-Factors and Mortgage Guarantee Companies (NBFC-MGC) could lie in any of the layers of the regulatory structure depending on the parameters of the scale based regulatory framework.

d) Government owned NBFCs shall be placed in the Base Layer or Middle Layer, as the case may be. They will not be placed in the Upper Layer till further notice.

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Qualification: CA in Practice
Location: MUMBAI, Maharashtra, India
Member Since: 24 Apr 2022 | Total Posts: 28
IBBI Valuator for Financial Instruments Retired Banker having an experience of 30 years in advances, Recovery and compliance. Consultant to the Banking Matters Flair to the Audit, Assurance and compliance works worked with Asset Reconstruction Company as consultant Visiting Lecturer on Bankin View Full Profile

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