NBFC Scale Based Regulation RBI India — SBR Compliance 2026

NBFC Scale Based Regulation RBI India — SBR Compliance 2026

RBI introduced the Scale Based Regulation (SBR) framework for NBFCs in October 2021 with implementation from October 2022. SBR replaces the earlier categorical approach with a four-layer framework based on size, activity, and interconnectedness. Each layer has progressively stringent regulatory requirements — the larger and more systemically important the NBFC, the more bank-like its regulation.

The Four NBFC Layers

Base Layer (NBFC-BL)

• All NBFCs not in Middle, Upper, or Top Layer
• Typically: small NBFCs with asset size below Rs. 1,000 crore
• P2P lending platforms, account aggregators, non-operative financial holding companies
• Regulations: broadly same as pre-SBR non-systemically important NBFCs

Middle Layer (NBFC-ML)

• NBFCs with asset size above Rs. 1,000 crore
• All deposit-taking NBFCs (NBFC-D)
• Standalone Primary Dealers (SPDs)
• HFCs (Housing Finance Companies)
• Regulations: significantly higher — approaching NBFC-NDSI regulations

Upper Layer (NBFC-UL)

• Top 10 NBFCs by asset size (regulatory determination)
• NBFCs specifically named by RBI based on systemic risk assessment
• Currently: HDFC Ltd (merged), LIC Housing Finance, Bajaj Finance, Shriram Finance, Mahindra Finance, Cholamandalam, SBI Cards, Tata Sons, Power Finance Corp, Rural Electrification Corp
• Regulations: near-bank equivalent — Tier 1 capital requirement, leverage limit, internal ratings-based approach

Top Layer (NBFC-TL)

• NBFCs posing extreme systemic risk — as determined by RBI
• May be converted to bank as per RBI discretion
• Currently: none identified (reserved category)

Key SBR Compliance Requirements by Layer

Base Layer — Key Requirements

• CRAR: 15%
• Maximum leverage: not explicitly specified (monitored)
• Board committees: Audit Committee, NRC (if listed)
• CRM: basic credit risk management
• CIMS reporting: monthly
• KYC: full compliance
• FPC: Board-approved

Middle Layer — Additional Requirements

• Mandatory Internal Rating System for large borrowers
• Mandatory risk management framework (Risk Committee)
• Liquidity Risk Management framework
• Asset Liability Management (ALM) framework
• Enhanced CIMS reporting
• Information Technology framework: RBI's IT circular requirements
• Large Exposure Framework: single borrower and group limits
• Net Interest Margin (NIM) monitoring

Upper Layer — Additional Requirements

• Common Equity Tier 1 (CET1) requirement: 9% (similar to banks)
• Internal Capital Adequacy Assessment Process (ICAAP)
• Stress testing: annual stress test on capital adequacy
• Board Risk Committee: mandatory
• Chief Risk Officer (CRO): mandatory appointment
• Enhanced related party transaction monitoring
• Supervisory College: for systemically important NBFCs

How to Determine Your Layer

For most NBFCs:

• Asset size below Rs. 1,000 crore → Base Layer
• Asset size Rs. 1,000 crore to Rs. 10,000 crore → typically Middle Layer
• Top 10 NBFC by asset → RBI determination for Upper Layer
• Deposit-taking: automatically Middle Layer
• HFC: automatically Middle Layer

RBI publishes the list of Upper Layer NBFCs annually. Base and Middle Layer is self-assessed.

MICS SBR Compliance Support

Layer Assessment

• Asset size computation: include off-balance sheet items per RBI guidance
• Layer determination: Base vs. Middle Layer determination
• Compliance gap: what additional requirements apply

Middle Layer Compliance

• Internal rating system: MICS configures borrower risk rating at origination
• Risk Committee: agenda and reporting framework for quarterly risk committee meetings
• ALM framework: asset liability gap reporting (6 months, 1 year, 5 year buckets)
• Liquidity Coverage Ratio: computation for applicable NBFCs
• IT policy framework: policies aligned to RBI IT circular

CIMS and Reporting

• Layer-appropriate CIMS returns: Base vs. Middle Layer have different return frequencies and depth
• Enhanced disclosures: Middle Layer must make more public disclosures

Board and Committee Support

• Risk Committee charter: for Middle Layer NBFCs
• ICAAP documentation: for Upper Layer NBFCs
• Compliance calendar: all deadlines per SBR layer

Pricing

• SBR layer assessment and gap analysis: Rs. 30,000 one-time
• Middle Layer compliance setup: Rs. 50,000 one-time + Rs. 20,000/month ongoing
• Upper Layer ICAAP support: custom engagement
• SBR compliance monitoring (all layers): included in MICS NBFC software subscription

Free SBR compliance consultation: +91 9355273535 | admin@mics.asia