Team of consulting auditors auditing the financial report data of the company (balance sheet, income statement) on computer screen with business charts, fintech
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The Reserve Bank of India is likely to issue its updated list of upper layer non-banking financial companies (NBFCs) by mid-2026, sources say, and could add large NBFCs promoted by banks and strong promoter in the list.
NBFCs, which can potentially be added to the list, include Credila Financial Services (formerly promoted by HDFC Bank), Axis finance promoted by Axis Bank, Kotak Mahindra Prime backed by Kotak Mahindra Bank, Can Fin Homes backed by Canara Bank, ICICI Home Finance promoted by ICICI Bank, Sundaram finance, Hero Fincorp, Poonawalla Fincorp, and Hinduja Leyland Finance. Except ICICI Home and Can Fin Homes, all other NBFCs have assets under management (AUM) of upwards of ₹40,000 crore as of September-end.
“Entities backed by large banks and promoters, which have gained scale and are becoming systemically important could be added to the upper layer list,” a source said.
Four-layer NBFCs
The RBI’s Scale-Based Regulatory Framework (SBR), effective October 2022, classifies NBFCs into four layers — base, middle, upper and top. NBFCs in middle layer and upper layer are considered to be systemically significant. The top layer is ideally expected to be empty, which will be populated only if the regulator forms opinion that there is a substantial increase in the potential systemic risk from specific NBFCs in the upper layer.
Upper layer NBFCs attract higher regulatory scrutiny, and unlisted upper layer NBFCs must list on stock exchanges within three years of classification. Presently, there are 15 large NBFCs in the upper layer category. These include LIC Housing Finance, Bajaj Finance, Shriram Finance, Tata Sons, Cholamandalam Investment and Finance, L&T Finance, M&M Finance, Aditya Birla Finance, Tata Capital, Piramal Capital, PNB Housing Finance, HDB Financial Services, Sammaan Capital, Muthoot Finance and Bajaj Housing Finance. Tata Sons has applied application for de-registration as upper layer NBFC with the RBI.”
“Reclassification of NBFCs from middle layer to upper layer becomes important to address systemic risks and continually focus on maintaining financial stability, which is the reason that the regulator revisits the classification on a periodic basis. We expect the regulator to focus on bank backed NBFCs for inclusion in the revised list of Upper Layer NBFCs given that interconnectedness and large asset size continue to be major drivers of systemic risk,” said Vivek Iyer, partner and national leader-financial services, Grant Thornton Bharat.
Says Pratik Shah, partner and national leader-financial services, EY India, “NBFCs that are likely to be evaluated closely are those with large, consolidated balance sheets, diversified funding profiles with greater reliance on market borrowings, and significant exposure to retail or MSME credit at scale.”
Changing tech landscape
However, he says with the rapidly evolving technology landscape in India’s BFSI sector — particularly the rise of platform-led and digitally originated lending models — an additional perspective has become increasingly relevant in assessing systemic importance.
These models have deepened bank–NBFC inter-linkages not only through co-lending and securitisation structures, but also through shared technology platforms, sourcing partnerships, and outsourced service arrangements, enabling stress to transmit more quickly across institutions. Further, funding behaviour during periods of tight liquidity, especially reliance on short-term market instruments, has emerged as an important indicator of systemic sensitivity.
Published on January 12, 2026
