RBI Update - Reserve Bank of India (Non-Banking Financial Companies – Registration, Exemptions and Framework for Scale Based Regulation) Second Amendment Directions, 2026

The Reserve Bank of India has issued the Reserve Bank of India (Non-Banking Financial Companies – Registration, Exemptions and Framework for Scale Based Regulation) Second Amendment Directions, 2026, effective immediately, revising the framework for identification and regulation of NBFCs under the Scale Based Regulatory (SBR) regime. The amendment simplifies the criteria for classification of NBFCs in the Upper Layer (NBFC-UL) by providing that all NBFCs with an asset size of ₹1,00,000 crore or more, based on their latest audited financial statements, will be identified annually by the RBI for inclusion in the Upper Layer, replacing the earlier multi-parameter assessment framework. The RBI has also removed certain existing provisions relating to the identification process and periodic review mechanisms, while providing that the asset-size threshold for NBFC-UL classification will be reviewed every three years. Further, a new provision has been introduced requiring NBFCs that are group entities of Scheduled Commercial Banks to comply with the applicable provisions of the Reserve Bank of India (Commercial Banks – Undertaking of Financial Services) Directions, 2025, where similar business activities are undertaken by both the parent bank and the NBFC. However, such entities will continue to retain their classification under the applicable layer of the SBR framework, notwithstanding the additional compliance requirements.