What is Scale-Based Regulation?
RBI's Scale-Based Regulation (SBR) framework — effective 1 October 2022 — replaces the older activity-based classification of NBFCs with a four-layer pyramid calibrated to size, activity and perceived systemic risk. Every NBFC sits in exactly one layer, and the layer determines its capital, governance, disclosure and exit obligations.
NBFC-BL — Base Layer
Non-deposit-taking NBFCs with asset size below ₹1,000 crore, plus categories such as NBFC-P2P, NBFC-AA, NOFHC and Type-I NBFCs. Key obligations:
- Net Owned Fund (NOF) of ₹10 crore by 31 March 2027.
- NPA recognition at 90 days overdue.
- Board-approved policies for credit, KYC and outsourcing.
- Fit-and-proper criteria for directors; experience disclosures.
NBFC-ML — Middle Layer
All deposit-taking NBFCs (regardless of size) and non-deposit-taking NBFCs with assets ≥ ₹1,000 crore, plus specified categories (HFC, IFC, IDF-NBFC, CIC, SPD). Adds:
- CRAR of 15% (Tier-I minimum 10%).
- Concentration norms: 25% of Tier-I for single borrower, 40% for groups.
- Board committees: Risk Management, ALM, Nomination & Remuneration.
- Chief Compliance Officer and internal capital adequacy assessment.
- Differential standard-asset provisioning by sector.
NBFC-UL — Upper Layer
The top 10 NBFCs by asset size, plus any NBFC specifically identified by RBI under the scoring methodology. Adds bank-like prudential standards:
- Common Equity Tier-1 (CET-1) ratio of 9%.
- Mandatory listing within 3 years of UL classification.
- Large Exposure Framework on the lines of scheduled commercial banks.
- Internal Capital Adequacy Assessment Process (ICAAP).
- Differential standard-asset provisioning and enhanced disclosures.
- Qualifications for independent directors and board-evaluation framework.
NBFC-TL — Top Layer
Currently empty by design. RBI may move an NBFC from Upper to Top Layer if it judges a substantial increase in systemic risk. The Top Layer attracts bespoke, higher capital charges and supervisory intensity beyond the Upper Layer baseline.
Transition and exit between layers
Re-classification happens once a year based on prior-year audited data. An NBFC moving up is given a glide path; an NBFC moving down continues to meet the higher requirements for at least five years to prevent regulatory arbitrage.
How BBNFC automates SBR obligations
BBNFC tags every compliance point in the Legal Compliance Register with the applicable layer, so directors see exactly which capital, governance and disclosure obligations apply to their NBFC. The BBAI Builder converts those obligations into board-resolution and policy clauses, while Reports tracks readiness for each layer-specific filing window.