The Reserve Bank of India (RBI) on Friday proposed changes in methodology for identifying upper layer non-banking finance companies (NBFCs), laying down an asset-size-based approach with a threshold of Rs 1 lakh crore.

The new draft rules, which replaces the current parametric system, is set to include large government-owned NBFCs in this category for the first time. They are currently in the middle or base layer.

Since the exposure norms are more stringent in the upper layer, the larger NBFCs moving there will come closer to bank-like regulatory norms. The proposed framework, however, is unlikely to materially impact the operating landscape in the short- to mid-term, analysts said.

As per the draft 'Reserve Bank of India (Non-Banking Financial Companies' Registration, Exemptions and Framework for Scale Based Regulation) Second Amendment Directions, 2026', upper layer NBFCs will be those having assets of over Rs 1 lakh crore.

"With a view to adopt a transparent, simple and absolute criteria for identification of NBFC-UL, it is proposed to replace the existing methodology with asset size criteria, which is currently proposed as Rs 1,00,000 crore and above," the RBI said.

Under the new draft norms, the listing of Tata Sons comes under attention as to whether it gets a reprieve. As of March 2025, Tata Sons, which is the holding company of the salt-to-software conglomerate, has an asset base of Rs 1.75 lakh crore.

According to the RBI rules, the top-15 entities in the upper layer have to list. Tata Sons is the only entity that has not gone for listing even after the October 2025 deadline.

With the draft norms pitching for inclusion of the government-run entities in the list of upper layer NBFCs, the potential candidates are large public sector lenders such as REC, PFC, IRFC and Housing and Urban Development Corporation. 

"The scale-based regulation framework currently places government-owned NBFCs in the base layer or middle layer and not in the UL. In pursuance of the principle of ownership neutral regulatory regime for NBFCs, it is now proposed to consider eligible government-owned NBFCs also for inclusion in the list of NBFC-UL based on the revised criteria," the draft said.

The draft has also proposed to allow all NBFC-UL to use state government guarantees as credit risk transfer instrument without any limit, subject to the specified conditions.