Athira Sethu
Kochi, 25 June 2026
The stock of major non-banking finance companies (NBFCs), such as REC Ltd., PFC, HUDCO, and IRFC, is likely to catch the eye of investors, following the Reserve Bank of India’s proposal to introduce new guidelines for classification of major NBFCs.
As per the new guideline, any NBFC with total asset size of ₹1 lakh crore or above will be automatically considered an ‘Upper Layer’ company. This is in place of the existing scoring methodology, which is currently used to classify NBFCs into this category.
The RBI pointed out that Upper Layer NBFCs require more stringent regulations, considering their size and significance to the financial system. Failure of such companies would have adverse impacts on the entire economy.
Presently, NBFCs have been categorized into four layers depending on their size, risk profile, and significance. The four layers include Base Layer, Middle Layer, Upper Layer, and Top Layer. Under the new proposal, determination of Upper Layer NBFCs has become more convenient due to the asset-size criterion.
RBI further clarified that the cut-off of ₹1 lakh crore of assets would be revisited every three years. Apart from this, special requirements shall apply to NBFCs belonging to banking groups irrespective of their regulatory layer classification.
One of the major reasons behind such classification of NBFCs is the need to enhance financial stability and improve regulation. The intention of RBI in introducing such layers is to ensure that the most significant NBFCs comply with higher norms regarding governance, capital adequacy, risk management, disclosures, and compliance.
The impact of this announcement is anticipated to be slightly negative for organizations such as PFC, REC, and HUDCO. This is attributed to the fact that regulations are likely to cause an increase in compliance and reporting costs. Nevertheless, it is anticipated that the impact will be negligible in the long run since the organizations in question are large government-run entities.
At the moment, investors are eagerly awaiting RBI guidelines in order to gauge the actual impact of the new regulations. In general, the proposed regulation is viewed as a move toward improved supervision of the large NBFCs.
