The Reserve Bank of India on June 24 announced a set of directions for upper-layer non-banking financial companies (NBFCs), which have overhauled the previous set of parametric scoring methodology.
Under the new guidelines, it will now use an asset-size criterion of Rs 1 lakh crore and above to identify NBFCs that may be considered for inclusion in the upper-layer category. In the earlier framework, upper-layer entities were identified using a scoring methodology based on size, interconnectedness and complexity.
This will now put the spotlight on Tata Sons, the holding company of the Tata group, which is registered as a core investment company (CIC) and has assets well above the prescribed threshold. Tata Sons had applied to cancel its CIC license in order to avoid listing on the stock exchanges. It was placed in the upper-layer NBFC list in 2022 and was expected to be listed by 2025.
The RBI said the Rs 1 lakh crore threshold will be reviewed every three years, instead of five years, as proposed in the draft framework. These norms will come into effect from June 24 itself.
The RBI has also revised some exposure norms for infrastructure finance companies (IFCs), which belong to the upper-layer category. The large exposure framework limit for such NBFC-IFCs will be increased to 45 percent of their capital base from 35 percent.
Additionally, the central bank said that government-owned NBFCs, which are eligible, will now be considered for inclusion in the upper-layer category, even as government-owned NBFCs will not be required to list on the stock exchanges.