{"id":151946,"date":"2025-01-18T19:22:27","date_gmt":"2025-01-18T13:52:27","guid":{"rendered":"https:\/\/pwonlyias.com\/stage\/?post_type=current-affairs&#038;p=151946"},"modified":"2025-02-13T15:57:39","modified_gmt":"2025-02-13T10:27:39","slug":"rbi-releases-nbfc-regulation","status":"publish","type":"current-affairs","link":"https:\/\/pwonlyias.com\/stage\/current-affairs\/rbi-releases-nbfc-regulation","title":{"rendered":"RBI Releases NBFC Upper Layer List for Year 2024-25"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">The Reserve Bank of India (RBI) has announced the list of Non-Banking Financial Companies (NBFCs) in the<\/span><b> Upper Layer (UL) <\/b><span style=\"font-weight: 400;\">under<\/span><b> Scale Based Regulation (SBR)<\/b><span style=\"font-weight: 400;\"> for the year 2024-25<\/span><\/p>\n<h2><span style=\"font-size: 18pt;\"><b>Highlights of Recent RBI Release<\/b><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The <\/span><b>NBFC Upper Layer (UL) list for 2024-25<\/b><span style=\"font-weight: 400;\"> includes Tata Sons Private Ltd, Bajaj Finance Ltd, LIC Housing Finance Ltd, and Aditya Birla Finance Ltd, among others.<\/span><\/p>\n<p style=\"text-align: center;\"><span class=\"vc_button\"><a href=\"https:\/\/www.pw.live\/batches\/upsc?utm_source=seo+upsc+batch&#038;utm_medium=seo+upsc&#038;utm_campaign=seo&#038;utm_id=upsc\" target=\"_blank\" rel=\"noopener\">Enroll now for UPSC Online Course<\/a><\/span><\/p>\n<h2><span style=\"font-size: 18pt;\"><b>About NBFC Regulation<\/b><\/span><\/h2>\n<ul>\n<li><b>Regulatory Powers<\/b><span style=\"font-weight: 400;\">: RBI regulates NBFCs under the RBI Act, 1934, with powers to register, inspect, and supervise NBFCs meeting the 50-50 principal business criteria.<\/span><\/li>\n<li><b>50-50 Principal Business Criteria<\/b><span style=\"font-weight: 400;\">: Financial activity constitutes over 50% of total assets and gross income.<\/span><\/li>\n<li><b>Requirements for NBFC Registration<\/b><\/li>\n<li style=\"list-style-type: none;\">\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Must be a company registered under Section 3 of the Companies Act, 1956.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Minimum Net Owned Fund (NOF) of \u20b9200 lakh.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2><span style=\"font-size: 18pt;\"><b>About Scale-Based Regulation (SBR) Framework<\/b><\/span><\/h2>\n<ul>\n<li><span style=\"font-weight: 400;\">The<\/span><b> Scale-Based Regulation (SBR)<\/b><span style=\"font-weight: 400;\"> framework, introduced by the<\/span><b> Reserve Bank of India <\/b><span style=\"font-weight: 400;\">\u00a0in<\/span><b> 2021<\/b><span style=\"font-weight: 400;\">, is a regulatory framework designed to classify<\/span><b> Non-Banking Financial Companies (NBFCs)<\/b><span style=\"font-weight: 400;\"> based <\/span><b>on their asset size and scoring criteria.<\/b><\/li>\n<li><span style=\"font-weight: 400;\">The aim is <\/span><b>to strengthen risk management<\/b><span style=\"font-weight: 400;\">, <\/span><b>apply proportional regulation<\/b><span style=\"font-weight: 400;\">, and<\/span><b> address systemic risks in the NBFC sector.<\/b><\/li>\n<li><b>Objectives of the SBR Framework<\/b>\n<ul>\n<li><b>Mitigation of Systemic Risks<\/b><span style=\"font-weight: 400;\">: To reduce the impact of financial contagion and safeguard the overall financial ecosystem.<\/span><\/li>\n<li><b>Proportional Regulation:<\/b><span style=\"font-weight: 400;\"> To ensure that regulatory intensity corresponds to the scale and complexity of NBFC operations.<\/span><\/li>\n<li><b>Enhanced Risk Management:<\/b><span style=\"font-weight: 400;\"> To improve the operational resilience and governance standards of NBFCs.<\/span><\/li>\n<\/ul>\n<\/li>\n<li><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-151917 alignright\" src=\"https:\/\/pwonlyias.com\/stage\/wp-content\/uploads\/2025\/01\/183-678babbcad7b6.webp\" alt=\"NBFC\" width=\"448\" height=\"258\" srcset=\"https:\/\/pwonlyias.com\/stage\/wp-content\/uploads\/2025\/01\/183-678babbcad7b6.webp 862w, https:\/\/pwonlyias.com\/stage\/wp-content\/uploads\/2025\/01\/183-678babbcad7b6-300x173.webp 300w, https:\/\/pwonlyias.com\/stage\/wp-content\/uploads\/2025\/01\/183-678babbcad7b6-768x442.webp 768w\" sizes=\"(max-width: 448px) 100vw, 448px\" \/><b>Categorization of NBFCs<\/b>\n<ul>\n<li><b>Base Layer (NBFC-BL): <\/b><span style=\"font-weight: 400;\">Includes smaller NBFCs with limited risk to the system.<\/span><\/li>\n<li><b>Middle Layer (NBFC-ML):<\/b><span style=\"font-weight: 400;\"> Comprises larger entities with moderate systemic importance.<\/span><\/li>\n<li><b>Upper Layer (NBFC-UL):<\/b><span style=\"font-weight: 400;\"> High-risk NBFCs based on scoring methodology and systemic importance.<\/span><\/li>\n<li><b>Top Layer (NBFC-TL)<\/b><span style=\"font-weight: 400;\">: Rarely occupied, for entities<\/span><b> posing exceptional risks.<\/b><\/li>\n<\/ul>\n<\/li>\n<li><b>Features of Enhanced Regulations<\/b>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><b>NBFC-ULs <\/b><span style=\"font-weight: 400;\">are subjected to <\/span><b>stricter regulatory requirements<\/b><span style=\"font-weight: 400;\"> for <\/span><b>at least five years.<\/b><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">This includes increased compliance, monitoring, and governance norms<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p style=\"text-align: center;\"><span class=\"vc_button\"><a href=\"https:\/\/store.pw.live\/govt-entrance-exams\/upsc-books?utm_source=SEO&#038;utm_medium=PW+Live&#038;utm_campaign=UPSC+CSE+Books\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Check Out UPSC CSE Books From PW Store<\/span><\/a><\/span><\/p>\n<h3><span style=\"font-size: 16pt;\"><b>Difference Between Banks and NBFCs<\/b><\/span><\/h3>\n<div class=\"vc_table_green\"><\/p>\n<table style=\"width: 99.5971%; height: 722px;\">\n<tbody>\n<tr style=\"height: 74px;\">\n<td style=\"height: 74px; width: 31.543%; text-align: center;\"><b>Parameter<\/b><\/td>\n<td style=\"height: 74px; width: 35.0997%; text-align: center;\"><b>Banks<\/b><\/td>\n<td style=\"height: 74px; width: 33.8358%; text-align: center;\"><b>NBFCs<\/b><\/td>\n<\/tr>\n<tr style=\"height: 108px;\">\n<td style=\"height: 108px; width: 31.543%;\"><b>Demand Deposits<\/b><\/td>\n<td style=\"height: 108px; width: 35.0997%;\"><span style=\"font-weight: 400;\">Can accept demand deposits<\/span><\/td>\n<td style=\"height: 108px; width: 33.8358%;\"><span style=\"font-weight: 400;\">Cannot accept demand deposits<\/span><\/td>\n<\/tr>\n<tr style=\"height: 108px;\">\n<td style=\"height: 108px; width: 31.543%;\"><b>Payment and Settlement System (PSS)<\/b><\/td>\n<td style=\"height: 108px; width: 35.0997%;\"><span style=\"font-weight: 400;\">Part of PSS; can issue cheques<\/span><\/td>\n<td style=\"height: 108px; width: 33.8358%;\"><span style=\"font-weight: 400;\">Not part of PSS; cannot issue cheques<\/span><\/td>\n<\/tr>\n<tr style=\"height: 108px;\">\n<td style=\"height: 108px; width: 31.543%;\"><b>Deposit Insurance<\/b><\/td>\n<td style=\"height: 108px; width: 35.0997%;\"><span style=\"font-weight: 400;\">Deposits insured by Deposit Insurance and Credit Guarantee Corporation<\/span><\/td>\n<td style=\"height: 108px; width: 33.8358%;\"><span style=\"font-weight: 400;\">No deposit insurance facility available<\/span><\/td>\n<\/tr>\n<tr style=\"height: 108px;\">\n<td style=\"height: 108px; width: 31.543%;\"><b>Reserve Ratios (CRR, SLR)<\/b><\/td>\n<td style=\"height: 108px; width: 35.0997%;\"><span style=\"font-weight: 400;\">Must maintain Reserve Ratios prescribed by RBI<\/span><\/td>\n<td style=\"height: 108px; width: 33.8358%;\"><span style=\"font-weight: 400;\">Not required to maintain Reserve Ratios<\/span><\/td>\n<\/tr>\n<tr style=\"height: 108px;\">\n<td style=\"height: 108px; width: 31.543%;\"><b>Regulation Act<\/b><\/td>\n<td style=\"height: 108px; width: 35.0997%;\"><span style=\"font-weight: 400;\">Regulated under Banking Regulation Act, 1949<\/span><\/td>\n<td style=\"height: 108px; width: 33.8358%;\"><span style=\"font-weight: 400;\">Regulated under Companies Act, 1956<\/span><\/td>\n<\/tr>\n<tr style=\"height: 108px;\">\n<td style=\"height: 108px; width: 31.543%;\"><b>Foreign Direct Investment (FDI)<\/b><\/td>\n<td style=\"height: 108px; width: 35.0997%;\"><span style=\"font-weight: 400;\">Up to 74% FDI allowed for private sector banks (49% under automatic route)<\/span><\/td>\n<td style=\"height: 108px; width: 33.8358%;\"><span style=\"font-weight: 400;\">100% FDI allowed<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><\/div>\n<div class=\"vc_table_green\"><\/p>\n<table style=\"width: 99.6375%;\">\n<tbody>\n<tr>\n<td style=\"width: 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2024-25<\/p>\n","protected":false},"author":11,"featured_media":151924,"menu_order":0,"comment_status":"open","ping_status":"open","template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"tags":[],"paper-wise":[2089],"subject":[2100],"acf":[],"_links":{"self":[{"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/current-affairs\/151946"}],"collection":[{"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/current-affairs"}],"about":[{"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/types\/current-affairs"}],"author":[{"embeddable":true,"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/users\/11"}],"replies":[{"embeddable":true,"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/comments?post=151946"}],"version-history":[{"count":3,"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/current-affairs\/151946\/revisions"}],"predecessor-version":[{"id":152049,"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/current-affairs\/151946\/revisions\/152049"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/media\/151924"}],"wp:attachment":[{"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/media?parent=151946"}],"wp:term":[{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/tags?post=151946"},{"taxonomy":"paper-wise","embeddable":true,"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/paper-wise?post=151946"},{"taxonomy":"subject","embeddable":true,"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/subject?post=151946"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}