Multiple NBFCs in a Group: Classification in Middle Layer
Multiple NBFCs in a Group: Classification in Middle Layer
Please refer to para 1 of the Annex to the Circular on “Scale Based Regulation (SBR): A Revised Regulatory Framework for NBFCs” issued on October 22, 2021 delineating the four layered regulatory structure for NBFCs under Scale Based Regulatory Framework.
2. As per para 16 of the Master Direction – Non-Banking Financial Company-Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions 2016, applicable NBFCs that are part of a common Group or are floated by a common set of promoters shall not be viewed on a standalone basis. In line with the existing policy on consolidation of assets of the NBFCs in a Group, the total assets of all the NBFCs1 in a Group2 shall be consolidated to determine the threshold for their classification in the Middle Layer.
3. If the consolidated asset (consolidation as per para 2 above) size of the Group is ₹1000 crore and above, then each Investment and Credit Company (NBFC-ICC), Micro Finance Institution (NBFC-MFI), NBFC-Factor and Mortgage Guarantee Company (NBFC-MGC) lying in the Group shall be classified as an NBFC in the Middle Layer and consequently, regulations as applicable to the Middle Layer shall be applicable to them. Illustrative examples are provided in the Annex to this circular.
4. Statutory Auditors are required to certify the asset size (as on March 31) of all the NBFCs in the Group every year. The certificate shall be furnished to the Department of Supervision of the Reserve Bank under whose jurisdiction the NBFCs are registered.
5. These guidelines shall be effective from October 01, 2022.
6. Provisions contained in this circular will not be applicable for classifying an NBFC in the Upper Layer.
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