Strict vigil on shadow banking: New rules implemented for NBFCs with Rs 1 lakh crore club, RBI will save the system from crash

Non-banking finance companies (NBFCs) with assets of Rs 1 lakh crore or more will be placed in the upper tier category. For this, a simple and concrete criterion will be adopted instead of the existing method of identifying such companies. The Reserve Bank of India said that comprehensive rules are needed for NBFCs falling in the ‘higher category’. There is a need to amend the existing rules based on a review of the manner in which NBFCs are identified in the ‘higher tier’ and the instructions regarding categorization of public sector NBFCs into different tiers. The central bank regulates NBFCs based on their size, risk profile and importance to the system.

Changed rules for NBFC

Under scale-based regulation, non-banking finance companies are divided into NBFCs-Basic Tier, NBFC-Medium Tier, NBFC-High Tier and NBFC-Top Tier. As per the Reserve Bank of India (Framework for Non-Banking Finance Companies Registration, Exemption and Scale-Based Regulation) Second Amendment Directions, 2026, the ‘higher tier’ will include those NBFCs that are specifically identified by the Reserve Bank every year and require enhanced regulations. Regarding the criteria for identification of NBFCs in the upper tier, it was said that the upper tier will include those NBFCs whose asset size is Rs 1,00,000 crore or more as per the latest financial statements of the financial year.

There will be a review every three years

It further states that the criteria for identification of NBFC-High Level (UL) should be reviewed from time to time. Also, the asset size limit for NBFC-high level identification should be reviewed every three years. The central bank said that NBFCs which are a group entity of a commercial bank and if a particular business/activity is being carried out by both the NBFC and its parent bank, they should follow the applicable rules. According to RBI, these rules are applicable to NBFCs which are group entities of scheduled commercial banks, irrespective of their level classification as per the provisions of these directions.