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Finance > Banks & institutions > Companies (banking) > RBI 25 January 2021 Reserve Bank of India (RBI) has proposed to introduce a scale-based regulatory framework, anchored on proportionality, for non-banking financial companies (NBFCs).  RBI said the proposed regulatory and supervisory framework of NBFCs shall be based on a four-layered structure – Base Layer, Middle Layer, Upper Layer and a possible Top Layer.  If the framework is visualised as a pyramid, the bottom of the pyramid, where least regulatory intervention is warranted, can consist of NBFCs, currently classified as non-syste...

In view of the recent stress in the Non-Banking Financial Compnies (NBFC) sector, it has become imperative to reexamine the suitability of regulatory approach, especially when failure of an extremely large NBFC can precipitate systemic risks, the RBI said today. The central bank has proposed a multiple layer structure to categorise NBFCs depending on their size and interconnectedness with the system. RBI stated that regulatory framework of NBFCs shall be based on a four-layered structure- Base Layer (NBFC-BL), Middle Layer (NBFC-ML), Upper Layer (NBFC-UL) and Top Layer. Proposed regulatory fr...