The Reserve Bank of India on Friday issued a list of large non-banking finance companies (NBFCs) who have been put in the “upper layer”. These 16 NBFCs, which include Tata Sons and Dilip Shanghvi’s Shanghvi Finance, will come under more scrutiny.
Under this ‘upper layer’ NBFCs (NBFC-UL) category, the RBI identifies companies based on a set of parameters and scoring methodology for more regulation and supervision. The 16 NBFCs have been asked by the central bank to put in place a board approved policy for adoption of the increased regulatory framework applicable to them.
Besides Tata Sons and Shanghvi Finance, other NDFCs in the list are LIC Housing Finance, Bajaj Finance, Shriram Transport Finance, L&T Finance, Indiabulls Housing, Piramal Capital & Housing, Cholamandalam Finance, M&M Finance, PNB Housing, Tata Capital, Aditya Birla Finance, HDB Finance, Muthoot Finance and Bajaj Housing Finance.
Despite appearing in the list of top 10 NBFCs in terms of asset size, HDFC is not being included in the list of NBFC-UL in the current review due to the ongoing merger process, the RBI said in a release.
“The NBFCs in the list must put in place a board-approved policy for adoption of the enhanced regulatory framework applicable to NBFC-UL and chart out an implementation plan for adhering to the new set of regulations within three months from the date of this press release,” it added.
Further, the boards of these NBFCs must ensure that the stipulations prescribed for the NBFC-UL are adhered to within a maximum 24 months from the date of the press release.
Meanwhile, the central bank had released the scale-based regulation (SBR), which is a revised regulatory framework for NBFCs, on October 22 last year. The framework categorises NBFCs in base layer (NBFC-BL), middle layer (NBFC-ML), and the NBFC-UL. There is a top layer (NBFC-TL) too. It specifies that UL shall comprise those as provided in the framework. The framework also envisages that top 10 NBFCs in terms of their asset size shall always reside in the Upper Layer.
