RBI proposes 4-tier structure for NBFCs

Mumbai: Reserve Bank of India has on Friday come out with a discussion paper on revised regulatory framework for Non-Banking Financial Companies (NBFCs), which has proposed a four-layered structure -base layer, middle layer, upper layer and top layer.

Regulatory framework for NBFCs is required to be re-oriented to keep pace with changing dynamics in the financial sector, RBI said. "The regulatory and supervisory framework of NBFCs shall be based on a four-layered structure– base layer, middle layer, upper layer and a possible top layer.

NBFCs in lower layer will be known as NBFC-Base Layer (NBFC-BL). NBFCs in middle layer will be known as NBFC-Middle Layer (NBFC-ML). An NBFC in the Upper Layer will be known as NBFC-Upper Layer (NBFC-UL) and will invite a new regulatory superstructure. There is also a Top Layer, which is ideally supposed to be empty. As such, no separate nomenclature is suggested," RBI said as part of its proposals for NBFCs.