Different categories / types of NBFCs

Different categories / types of NBFCs

By the kind of activity, they conduct. Within this broad categorization the different types of NBFCs are as follows:

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  • Asset Finance Company (AFC)
  • Investment Company (IC)
  • Loan Company (LC)
  • Infrastructure Finance Company (IFC)
  • Systemically Important Core Investment Company (CIC-ND-SI)
  • Infrastructure Debt Fund: Non- Banking Financial Company (IDF-NBFC)
  • Non-Banking Financial Company – Micro Finance Institution (NBFC-MFI)
  • Mortgage Guarantee Companies (MGC)
  • NBFC- Non-Operative Financial Holding Company (NOFHC)

CLASSIFICATION OF NBFCS IN LAYERS:

Base Layer – Middle Layer – Upper Layer – Top Layer 

Base Layer

  • Non-deposit-taking NBFCs below the asset size of ₹1000 crore
  • NBFCs undertaking the various activities will always remain in the Base Layer of the Regulatory Structure.
  • NBFC-Peer to Peer Lending Platform (NBFC-P2P)
  • NBFC-Account Aggregator (NBFC-AA)
  • Non-Operative Financial Holding Company (NOFHC)
  • NBFCs that are not availing public funds and do not have any customer interface

Middle Layer

All deposit-taking NBFCs (NBFC-Ds), irrespective of the asset size Non-deposit taking NBFCs with asset size of ₹1000 crore and above NBFCs undertaking the following activities:

  • Standalone Primary Dealers (SPDs)
  • Infrastructure Debt Fund – Non-Banking Financial Companies (IDF-NBFCs)
  • Core Investment Companies (CICs)
  • Housing Finance Companies (HFCs)
  • Infrastructure Finance Companies (NBFC-IFCs)
  • Deposit-taking NBFCs (NBFC-Ds),
  • Core Investment Companies (CICs),
  • Infrastructure Finance Companies (NBFC-IFCs) and,
  • Housing Finance Companies (HFCs) will be included in Middle Layer or the Upper Layer and not in the Base layer, as the case may be.
  • Standalone Primary Dealers (SPDs) and Infrastructure Debt Fund – Non-Banking Financial Companies (IDF-NBFCs) will always remain in the Middle Layer.

Upper Layer

Identification of NBFCs in the Upper Layer shall be on the basis of a set of Parameters and Scoring Methodology having a weightage of 70% and 30% respectively, as is indicated in the Appendix of the Framework and which will be evaluated based on their annual performance as of March 31 each year. However, the top 10 eligible NBFCs in terms of asset size will reside in this category irrespective of any other factor.

Top Layer

NBFC Upper Layer will be moved to Top Layer if the Reserve Bank of India recognizes a substantial increase in the potential systemic risk from specific NBFC in the Upper Layer. As of now, the Top Layer shall ideally remain empty. Note: The remaining NBFCs, viz., Investment and Credit Companies (NBFC-ICC), Micro Finance Institution (NBFC-MFI), NBFC-Factors, and Mortgage Guarantee Companies (NBFC-MGC) could be placed in any of the layers of the regulatory structure depending on the parameters of the scale based regulatory framework. Government-owned NBFCs shall be placed in the Base Layer or Middle Layer, as the case may be.