RBI has released a list of upper layer NBFCs for 2023-2024

The Reserve Bank of India (RBI) has announced the list of non-banking finance companies (NBFCs) in the upper layer for 2023-2024. The list includes 15 companies, with LIC Housing Finance, Bajaj Finance, and Shriram Finance among the top names.

How is the list created?

The RBI uses a scale-based regulation (SBR) framework to categorize NBFCs into four layers: base layer, middle layer, upper layer, and top layer.

The upper layer includes NBFCs that the RBI specifically identifies warranting enhanced regulatory requirements. The list is reviewed annually, and NBFCs can move between layers depending on their size and risk profile.

The 15 companies in the upper layer for 2023-2024 are:

• LIC Housing Finance
• Bajaj Finance
• Shriram Finance
• Tata Sons Pvt Ltd
• L&T Finance
• Piramal Capital
• Cholamandalam Finance
• Indiabulls Housing
• Mahindra and Mahindra Financial Services
• Tata Capital Financial Services
• PNB Housing Finance
• HDB Financial Services
• Aditya Birla Finance
• Muthoot Finance
• Bajaj Housing Finance

These companies will be subject to enhanced regulatory requirements, such as higher capital adequacy ratios and liquidity ratios.

Why the upper layer is important?

The upper layer is essential because it helps to identify and monitor NBFCs that pose a higher risk to the financial system. By imposing stricter regulations on these companies, the RBI can help to mitigate the chances of a systemic crisis.