The Reserve Bank of India (RBI) has revised the scale-based regulatory structure for NBFCs in India. The new structure, which came into effect on October 1, 2022, classifies NBFCs into three layers based on their asset size:
- Layer 1: NBFCs with assets of up to ₹1,000 crore.
- Layer 2: NBFCs with assets of more than ₹1,000 crore but less than ₹5,000 crore.
- Layer 3: NBFCs with assets of ₹5,000 crore or more.
The new structure imposes different regulatory requirements on NBFCs in each layer. For example, NBFCs in Layer 1 are subject to lower capital adequacy requirements than NBFCs in Layer 3.
Key features of the revised SBR structure
The key features of the revised SBR structure are:
- It is based on the asset size of NBFCs.
- It imposes different regulatory requirements on NBFCs in each layer.
- It is designed to ensure that NBFCs are regulated in a way that is commensurate with their risk profile.
- It is expected to help to improve the stability of the NBFC sector.
MCQs on the revised SBR structure of NBFCs in India
- Which of the following is not a layer in the revised SBR structure for NBFCs in India?
- Layer 1
- Layer 2
- Layer 3
- Layer 4
- Which layer of the SBR structure is subject to the lowest capital adequacy requirements?
- Layer 1
- Layer 2
- Layer 3
- There is no difference in capital adequacy requirements across layers
- What is the main objective of the revised SBR structure?
- To ensure that NBFCs are regulated in a way that is commensurate with their risk profile
- To improve the stability of the NBFC sector
- To make it easier for NBFCs to raise capital
- To make it easier for NBFCs to operate