Revised Scale Based Regulatory Structure of NBFC in India

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

  1. 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
  2. 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
  3. 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