What changed
RBI consolidated and updated concentration risk management rules for NBFCs into a single direction, effective immediately upon issuance on November 28, 2025 (updated as on April 01, 2026). It introduces category-wise exposure limits and internal caps for Base, Middle, and Upper Layer NBFCs, with specific chapters for each layer. The directions also extend large exposure framework requirements to Upper Layer NBFCs and clarify applicability for HFCs, MGCs, and SPDs.
What it means for you
NBFCs must now comply with a unified framework that tightens concentration risk oversight, requiring them to set internal limits on single counterparty and group exposures, and avoid geographic concentration. Upper Layer NBFCs face additional large exposure norms, increasing compliance burden. Lenders need to review and adjust their credit and investment portfolios to align with these new limits, or face regulatory action.
What you must do
- Review and update internal concentration risk policies to comply with the new exposure limits for your NBFC layer.
- Set internal limits on single counterparty, group, and geographic exposures as per the directions.
- Ensure Upper Layer NBFCs implement the large exposure framework requirements.
- Train compliance and risk teams on the new consolidated directions and their applicability.
- Monitor RBI updates for any amendments or clarifications, especially for HFCs and SPDs.
Who it affects
NBFCs in Base Layer (NBFC-BL), NBFCs in Middle Layer (NBFC-ML), NBFCs in Upper Layer (NBFC-UL), Housing Finance Companies (HFCs), Mortgage Guarantee Companies (MGCs) in Upper Layer, Standalone Primary Dealers (SPDs) registered as NBFCs, NBFC-D, NBFC-ICC, NBFC-Factor, NBFC-MFI, NBFC-IFC, IDF-NBFC
Which NBFCs are exempt from these directions?
NBFC-P2P, NBFC-AA, CICs, NOFHCs, NBFCs not availing public funds and without customer interface, and NBFCs-BL having customer interface but not availing public funds are exempt.
When do these directions take effect?
They came into effect immediately upon issuance on November 28, 2025, and were updated as on April 01, 2026.
Do these directions apply to HFCs?
Yes, but only certain paragraphs (excluding paragraph 7, 14, 16, 19, 22, and 23) apply to HFCs registered with RBI under the NHB Act.