The Reserve Bank of India (RBI) on August 6 released its latest list of Upper Layer Non-Banking Financial Companies (NBFC-UL), adding four state-owned lenders to the category that is subject to enhanced regulatory oversight under the central bank’s scale-based regulation framework.
The latest list comprises 17 NBFCs, up from 15 in the previous list released for FY25. The RBI did not publish a list for FY26 as it was reviewing the criteria for identifying Upper Layer NBFCs.
The new entrants are REC Ltd, Power Finance Corporation Ltd (PFC), Indian Railway Finance Corporation Ltd (IRFC) and Housing and Urban Development Corporation Ltd (HUDCO).
The RBI has removed PNB Housing Finance Ltd and Sammaan Capital Ltd from the latest list. However, both companies will continue to remain subject to the enhanced regulatory framework as entities classified as NBFC-UL continue to be governed by the stricter norms for five years even if they no longer meet the eligibility criteria.
REC Limited Power Finance Corporation Limited Indian Railway Finance Corporation Limited Bajaj Finance Limited Shriram Finance Limited LIC Housing Finance Limited Cholamandalam Investment and Finance Company Limited Tata Capital Limited Tata Sons Private Limited Muthoot Finance Limited Aditya Birla Capital Limited Housing and Urban Development Corporation Limited Mahindra & Mahindra Financial Services Limited L&T Finance Limited Bajaj Housing Finance Limited HDB Financial Services Limited Piramal Finance Limited
Why Tata Sons continues on the list
The RBI also retained Tata Sons Pvt Ltd in the Upper Layer list, while clarifying that the inclusion does not affect the outcome of the Tata group’s pending application to surrender its NBFC registration.
“Inclusion of Tata Sons Pvt Ltd in the list is without prejudice to the outcome of its application for de-registration, which is under examination,” the RBI said.
Tata Sons, the holding company of the $400-billion Tata Group, was first classified as an Upper Layer NBFC in 2022. Following the classification, the company initiated a restructuring of its financial business interests and sought exemption from the regulatory designation. The RBI has not indicated a timeline for deciding on its de-registration request.
What is an NBFC-UL?
The RBI’s Upper Layer comprises systemically important non-bank lenders and core investment companies that warrant enhanced supervision because of their size, interconnectedness and complexity. These entities are subject to stricter norms on capital adequacy, governance, disclosures and risk
management.
Under the RBI’s scale-based regulatory framework, NBFCs are classified into four layers—Base Layer, Middle Layer, Upper Layer and Top Layer—based on factors including asset size, leverage, business complexity and systemic importance. The Top Layer remains a largely empty supervisory bucket reserved for NBFCs that pose exceptional systemic risk.
