RBI finalises rules for NBFC Upper Layer: ₹1 lakh crore asset size stays as norm

The Reserve Bank of India (RBI) on Wednesday finalised the threshold for upper layer non-banking financial companies (NBFC-UL) as entities with an asset size of ₹1,00,000 crore and above.

Though the central bank did not disclose the final NBFC-UL list, Tata Sons is expected to be considered as an upper layer NBFC since the RBI is yet to take a final decision on the company's request for cancellation of its registration. Tata Sons was placed in the NBFC-UL list in September 2022 and was expected to complete the listing process by September 2025.

The RBI also said that "the asset size for identifying NBFC-UL shall be as evidenced in the audited balance sheet of the company on a standalone basis, prepared as per applicable accounting standards." It was responding to a proposal which sought clarification on the specific components to be included in the computation of “asset size” for NBFC-UL categorisation. While Tata Sons' FY26 annual report is yet to be made public, the holding company’s standalone balance sheet size, as of March 2025, stood at ₹1.75 lakh crore.

The RBI shot down a suggestion to consider setting the threshold at least at ₹2,50,000 crore or higher with complementary objective metrics of profitability and asset quality, for identification of NBFCs in the Upper Layer.

In response to this, the RBI said: “The asset size threshold of ₹1,00,000 crore and above has been decided on the basis of current profile of NBFC sector and also on analysis of financial profile of existing NBFC-UL. Further, in view of the growth trend of the sector, the periodicity for review of the asset size threshold is reduced from five years to three years."

In a major decision, the central bank also said that eligible government NBFCs will be included in NBFC-UL in view of their interconnectedness with the financial system and in pursuance of the principle of ownership-neutral regulatory regime for NBFCs.

Hence, it has been decided to increase the LEF limits for the group of connected counterparties of NBFC-IFC in Upper Layer from 35% to 45% of the eligible capital base. This was being done "considering the specialized nature of NBFC-IFC, the needs of the infrastructure sector and to avoid adverse impact on existing infrastructure projects," the RBI said.

All these changes and clarifications are part of amendments issued by the RBI after a review of the feedback received on draft proposals released in April. Time was given till May 4 to submit the public feedback.