In January 2025, the Reserve Bank of India (RBI) released the list of Non-Banking Finance Companies (NBFCs) in the Upper Layer (UL) segment under the Scale Based Regulation (SBR) for NBFCs for the Financial year 2024-25(FY25).
- RBI has retained Tata Sons Private Limited in the NBFC UL list despite its request to de-register as a NBFC, is under examination.
- The updated list comprises 15 companies that include Life Insurance Corporation of India (LIC) Housing Finance Limited (HFL), Bajaj Finance Limited (BHL), and Shriram Finance Limited (SFL), among others.
Key Points:
i.Muthoot Finance Limited (MFIN), a flagship of Muthoot Group is the only gold loan NBFC included in the RBI’s ‘UL’ list for three consecutive years.
- The company received UL status for the 1st time in FY23.
ii.Piramal Enterprise Limited(PEL), which qualified for inclusion on the list based on scoring, has been eliminated for the year 2024-25 due to ongoing reorganization in the business group.
List of NBFC-UL for 2024-25:
| S.No. | Name of the NBFC | Category of the NBFC |
|---|---|---|
| 1 | LIC Housing Finance Limited | Deposit taking Housing Finance Company (HFC) |
| 2 | Bajaj Finance Limited (BFL) | Deposit taking NBFC-Investment Credit Company (ICC) |
| 3 | Shriram Finance Limited (SFL)(formerly Shriram Transport Finance Company) | Deposit taking NBFC-ICC |
| 4 | Tata Sons Private Limited | Core Investment Company (CIC) |
| 5 | Cholamandalam Investment and Finance Company Limited (Chola) | Non-Deposit taking NBFC- ICC |
| 6 | L&T Finance Limited (formerly known as L&T Finance Holdings Limited) | Non-deposit taking NBFC-ICC |
| 7 | Mahindra & Mahindra Financial Services Limited (MMFSL) | Deposit taking NBFC-ICC |
| 8 | Aditya Birla Finance Limited (ABFL) | Non-Deposit taking NBFC-ICC |
| 9 | Tata Capital Financial Services Limited (TCFSL) | Non-deposit taking NBFC-ICC |
| 10 | Piramal Capital & Housing Finance Limited(PCHFL) | Non-deposit taking HFC |
| 11 | PNB Housing Finance Limited | Deposit taking HFC |
| 12 | HDB Financial Services Limited(HDBFS) | Non-deposit taking NBFC-ICC |
| 13 | Muthoot Finance Limited (MFIN) | Non-deposit taking NBFC-ICC |
| 14 | Samman Capital Limited (SCL)(formerly Indiabulls Housing Finance, IBHFL) | Non-deposit taking NBFC |
| 15 | Bajaj Housing Finance Limited (BHFL) | Non-deposit taking HFC |
About SBR Framework:
i.In October 2021, the RBI introduced the SBR framework, which classifies NBFCs into 4 different layers based on their asset size and scoring methodology.
ii.4 different layers under which NBFCs are categorised:
- NBFC-BL (Base Layer, BL): It mainly consists of non-deposit taking NBFCs with assets less than Rs 1,000 crore.
- NBFC-ML (Middle Layer, ML): It consists of all-deposit taking NBFCs and non-deposit taking NBFCs with assets more than Rs 1,000 crore.
- NBFC-UL (Upper Layer, UL): NBFCs in this layer are subjected to enhanced regulatory requirements for at least 5 years, even if they fail to meet the criteria in subsequent reviews.
- NBFC-TL (Top Layer, TL):NBFC-UL will be moved to TL if RBI recognizes a substantial increase in the potential systemic risk.
Recent Related News:
According to the CRISIL Ratings Limited (formerly Credit Rating and Information Services of India Limited), India’s 1st credit rating agency, the growth in Assets Under Management (AUM) of Non-Banking Financial Companies (NBFCs) is expected to moderate to 15-17% in Financial Year 2024-25 (FY25) as well as in FY26.
- This marks a sharp decline of 600-800 basis points (bps) from a strong growth of 23% in FY24.
