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India’s NBFC sector — size, the Scale-Based Regulation layers and what NBFCs do

Q: What is the Scale-Based Regulation (SBR) framework for NBFCs?

The Scale-Based Regulation (SBR) framework, in force since 1 October 2022, regulates NBFCs in proportion to their size, activity and systemic importance through four layers. The Base Layer (NBFC-BL) covers smaller, non-systemically-important NBFCs with the lightest regulation. The Middle Layer (NBFC-ML) covers all deposit-taking NBFCs plus larger non-deposit-taking ones (assets of about Rs 1,000 crore or more) and specified categories. The Upper Layer (NBFC-UL) is a small group of the largest NBFCs that the RBI specifically identifies for bank-like regulation — higher capital, large-exposure limits and a mandatory stock-market listing. The Top Layer (NBFC-TL) is designed to stay empty and would only be used if a specific Upper-Layer NBFC posed an extreme systemic risk.

Q: How large is the NBFC sector compared with banks?

NBFCs are much smaller than India's banks in balance-sheet terms — NBFC assets of roughly Rs 50 lakh crore (March 2024) are around a fifth to a quarter of the scheduled commercial banks' balance sheet. But they punch above their weight in specific niches: vehicle finance, gold loans, consumer durables, microfinance and parts of infrastructure and housing finance, where they often out-lend banks. They are also closely linked to banks, which are a major source of their funding, so the RBI watches bank-to-NBFC exposure carefully. All figures are rounded and approximate.

Quick answerIndia’s Non-Banking Financial Companies (NBFCs) are RBI-regulated lenders that are not banks — they cannot take demand deposits, are outside the payments system, and their depositors are not covered by DICGC insurance. Consolidated assets have grown from ~Rs 34 lakh crore (Mar 2020) to ~Rs 50 lakh crore (Mar 2024) — roughly a fifth to a quarter of the banks’ balance sheet, but dominant in vehicle, gold, consumer and microfinance lending. Since 1 October 2022 the sector is regulated under the RBI’s four-layered Scale-Based Regulation (SBR) framework: Base, Middle, Upper and a normally-empty Top layer. Figures are official, rounded and approximate.

The chart shows the NBFC sector’s consolidated assets growing over five years. The table below carries the same figures so the page is readable without JavaScript — for accessibility and AI answer engines.

NBFC sector consolidated assets, by year-end March

Year	Assets (approx.)	Note
Mar 2020	~Rs 34 lakh cr	Pre-pandemic; sector still recovering from the 2018 IL&FS / NBFC liquidity stress
Mar 2021	~Rs 36 lakh cr	Pandemic year; growth slows, asset quality watched closely
Mar 2022	~Rs 39 lakh cr	Recovery; the Scale-Based Regulation framework is announced
Mar 2023	~Rs 43 lakh cr	Double-digit credit growth resumes, led by retail lending
Mar 2024	~Rs 50 lakh cr	Strong expansion; RBI tightens risk weights on unsecured & bank-to-NBFC lending

All figures are rounded and approximate, on an RBI Report on Trend & Progress of Banking / Financial Stability Report framing; year-end values are indicative. None of these figures is in the BankPulse Verified-numbers ledger pending reviewer sign-off. For exact figures see the source linked below.

The four layers of Scale-Based Regulation (SBR)

Since 1 October 2022 the RBI regulates NBFCs in proportion to their size, activity and systemic importance. The bigger and more interconnected the NBFC, the higher the layer and the closer the rules get to those for banks.

Layer	Who falls in it	Regulatory intensity
Base Layer (NBFC-BL)	Non-deposit-taking NBFCs below ~Rs 1,000 crore in assets and other non-systemically-important categories (e.g. P2P platforms, account aggregators, smaller NBFC-ICCs).	Lightest touch — the regulatory floor
Middle Layer (NBFC-ML)	ALL deposit-taking NBFCs (NBFC-Ds) regardless of size, plus non-deposit-taking NBFCs with assets >= ~Rs 1,000 crore, and specified categories — Standalone Primary Dealers, Infrastructure Finance Companies (IFCs), Core Investment Companies (CICs), Housing Finance Companies (HFCs) and Infrastructure Debt Funds.	Stricter — governance, exposure and provisioning norms
Upper Layer (NBFC-UL)	NBFCs specifically identified by the RBI as warranting enhanced regulation, on a parameter-and-scoring methodology — broadly the largest ~15-16 NBFCs each year.	Bank-like — higher CRAR, large-exposure limits, a mandatory listing requirement and a board-approved internal capital adequacy process
Top Layer (NBFC-TL)	Designed to remain EMPTY — populated only if the RBI judges that a specific Upper-Layer NBFC poses an extreme, systemic threat.	Highest — bespoke, intensive supervision

Why a scale-based approach?After the 2018 IL&FS default exposed how a single large NBFC can transmit stress across the financial system, the RBI moved from one-size-fits-all rules to a proportionate framework. Small NBFCs keep a light touch so credit keeps flowing to underserved borrowers, while the largest, most interconnected NBFCs face bank-like capital, exposure and governance norms — and a mandatory stock-market listing for transparency.

The main kinds of NBFC

NBFCs are also classified by what they do. These activity categories cut across the SBR layers.

Category	What it does
Investment & Credit Company (NBFC-ICC)	The merged catch-all category for asset finance, loan and investment companies — vehicle, consumer, gold, personal and business lending
Housing Finance Company (HFC)	Home-loan specialists; regulation transferred from the National Housing Bank to the RBI in 2019 and aligned with NBFC norms
Infrastructure Finance Company (IFC)	Lends predominantly to infrastructure projects; higher single/group exposure ceilings
Microfinance Institution (NBFC-MFI)	Collateral-free small-ticket lending to low-income households under the RBI 2022 harmonised microfinance framework
Core Investment Company (CIC)	Holds equity/debt of group companies; a holding-company structure for large conglomerates
Other specialised NBFCs	Factors, Infrastructure Debt Funds, Standalone Primary Dealers, Account Aggregators, P2P-lending platforms and more

How NBFC regulation evolved

Year	Milestone
1963	RBI given powers over NBFCs by adding Chapter III-B to the RBI Act, 1934
1997	RBI Act amended to require compulsory registration and prudential norms for NBFCs after the CRB Capital failure
2018	Default by IL&FS triggers a sector-wide liquidity and confidence crisis, exposing asset-liability mismatches
2019	Housing Finance Companies (HFCs) move from the National Housing Bank to RBI regulation; a revised liquidity-risk (LCR) framework for large NBFCs is introduced
Oct 2021	RBI announces the Scale-Based Regulation (SBR) framework — a four-layered, proportionate approach to NBFC regulation
1 Oct 2022	SBR framework takes effect; the RBI publishes its first list of Upper-Layer (NBFC-UL) entities
Nov 2023	RBI raises risk weights on consumer credit and on bank lending to NBFCs to cool fast-growing unsecured retail loans

What it means for bankers

NBFCs are both competitors and customers of banks. They out-lend banks in vehicle finance, gold loans, consumer durables and microfinance, reaching borrowers and geographies banks find costly to serve — yet banks are among the biggest funders of NBFCs through term loans, bonds and commercial paper, so the two are tightly linked. That linkage is exactly why the RBI, after the 2018 IL&FS shock, built the Scale-Based Regulation framework and, in November 2023, raised risk weights on both consumer credit and bank lending to NBFCs to cool fast-growing unsecured retail loans. For a banker the watch-items are: where an NBFC’s asset quality sits in the cycle, how much of the book is unsecured, and how dependent the NBFC is on bank funding versus market borrowing. The largest NBFCs now sit in the Upper Layer under near-bank rules — effectively shadow banks being pulled into the daylight.

More live dataRelated BankPulse pages: NPA / Asset-Quality Tracker · Bank Health Scores · Gold Loans · Co-operative Banks · NBFC & Co-operative pillar.

NBFC sector FAQ

What is an NBFC and how is it different from a bank?

A Non-Banking Financial Company (NBFC) is a company registered with and regulated by the RBI that lends and invests but is not a bank. NBFCs cannot accept demand deposits (no savings/current accounts), only a small subset may take term deposits, they are not part of the payment-and-settlement system, and their depositors are NOT covered by DICGC deposit insurance. They specialise in vehicle, gold, consumer, microfinance, housing and infrastructure lending, often reaching segments banks underserve. Sector assets are ~Rs 50 lakh crore (Mar 2024) — rounded and approximate.

What is the Scale-Based Regulation (SBR) framework for NBFCs?

In force since 1 October 2022, SBR regulates NBFCs in proportion to size and systemic importance across four layers: the Base Layer (smaller, lightest regulation); the Middle Layer (all deposit-taking NBFCs plus larger non-deposit-taking ones and specified categories); the Upper Layer (the largest ~15-16 NBFCs the RBI names for bank-like rules — higher capital, large-exposure limits and mandatory listing); and the Top Layer, designed to stay empty unless an Upper-Layer NBFC poses an extreme systemic risk.

How large is the NBFC sector compared with banks?

NBFCs are far smaller than banks — assets of ~Rs 50 lakh crore (Mar 2024) are roughly a fifth to a quarter of the scheduled commercial banks' balance sheet — but they dominate niches like vehicle finance, gold loans, consumer durables and microfinance. Banks are a major funding source for NBFCs, so the RBI watches bank-to-NBFC exposure closely. Figures are rounded and approximate.

Methodology & sources: see how BankPulse dashboards are sourced, verified & updated · machine-readable NBFC-sector JSON feed.

Last reviewed 22 Jun 2026 by Vikram Jain

Source: RBI — Report on Trend & Progress of Banking in India, Financial Stability Report and the Scale-Based Regulation (SBR) framework for NBFCs, rbi.org.in. Asset figures are rounded and approximate, year-end values are indicative, and none is in the BankPulse Verified-numbers ledger pending reviewer sign-off. We never reproduce source text verbatim. Reviewed by Vikram Jain. Last updated 22 Jun 2026, 00:11 IST.

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