The comprehensive set of criteria provides for a Scale Based Regulation (SBR) framework that takes into account capital requirements, governance standards, prudential regulation and other aspects of NBFCs.
The framework classifies NBFCs into base layer (NBFC-BL), middle layer (NBFC-ML), upper layer (NBFC-UL) and top layer (NBFC-TL).
In a statement, RBI said it has identified 16 NBFCs for classification as NBFC-UL under the framework.
Although, HDFC RBI said that Limited has not been included in the list of Upper Layer (NBFC-UL) in the current review. HDFC is in the process of merger with its subsidiary HDFC bank,
The 16 NBFCs on the list are LIC Housing Finance; Bajaj Finance; Shriram Transport Finance Company; Tata Sons; L&T Finance; Indiabulls Housing Finance; Piramal Capital & Housing Finance; Cholamandalam Investment and Finance Company; Sanghvi Finance; Mahindra & Mahindra Financial Services; PNB Housing Finance; Tata Capital Financial Services; Aditya Birla Finance; HDB Financial Services; Muthoot Financeand Bajaj Housing Finance.
The top layer includes those NBFCs, which are specifically identified by the Reserve Bank as guaranteeing enhanced regulatory requirements based on a set of parameters.
RBI said that 16 NBFCs will formulate a board-approved policy for adopting the enhanced regulatory framework applicable to NBFC-UL and an implementation plan to comply with the new set of rules within three months from the date of this press . release.
Further, the Board of these NBFCs shall ensure that the conditions prescribed for NBFC-UL are complied with within a maximum period of 24 months.
The central bank’s decision to introduce a scale-based framework last year came against the backdrop of the collapse of IL&FS in 2018 and the subsequent DHFL, which had an impact on the entire financial system, especially in the context of the liquidity crisis.