Upper-Layer NBFCs Are Exposed To A Higher Tier I (CET1) Ratio.
FinTech BizNews Service
Mumbai, April 15, 2026: The latest Kotak Institutional Equities report on the categorization of upper-layer NBFCs provides useful insights on the RBI measures:
Upper-layer NBFC categorization simplified, no major changes for listed companies
The RBI has simplified the categorization of upper-layer NBFCs to include NBFCs above Rs1 tn and done away with the parametric criteria earlier. We do not find any impact on NBFCs under coverage or the large listed ones. Remain assertive on the sector, with Bajaj Finance, Aditya Birla Finance and Tata Capital—among the larger players—providing meaningful upside post the rally last week.
RBI simplified upper-layer classification
The RBI has simplified the categorization of upper layer NBFCs. The new proposed norm (based on the draft notification) suggests that any NBFC above the asset size of Rs1 tn will be categorized as an upper layer NBFC. The current rule prescribes a two-pronged methodology for identification, viz., top 10 eligible NBFCs by asset size and parametric scoring methodology. Upper-layer NBFCs are subject to enhanced regulatory requirements, at least for a period of five years from their classification in the layer. The RBI has classified 15 NBFCs in the upper layer as of March 2026. Tata Sons is the only unlisted NBFC from the list published by the RBI.
Enhanced supervisory engagement for upper-layer NBFCs, rating agencies more comfortable
Upper-layer NBFCs are exposed to a higher tier I (CET1) ratio. There will be enhanced and intensive supervisory engagement with these NBFCs (link). Single-party and group exposure norms also differ across middle- and upper layer NBFCs. The RBI had already withdrawn the detailed (October 2021) scalebased regulations (link). This guideline had prescribed capital requirements, NPL classification for the base layer, capital adequacy guidelines, credit concentration, governance guidelines and additional criteria, which included qualification of board members, disclosures and listing within three years for upper-layer NBFCs. Rating agency S&P has recently upgraded large NBFCs following the strengthened regulatory environment (link).
Large NBFCs already in upper layer
We do not find any significant impact on stocks under our coverage or listed NBFCs. Most large NBFCs are already under the upper layer. The subsidiaries of NBFCs, including that of Tata Capital and Aditya Birla, engaged in housing finance and growing rapidly will likely qualify to be among upper-tier NBFCs in the next few years, assuming they retain high growth momentum and the asset size prescribed by the RBI remains unchanged. It is not clear if these NBFCs will need to be listed by then. Notably, Aditya Birla Housing Finance and Tata Housing Finance reported AUM of Rs422 bn and Rs816 bn in December 2025.
