Reserve Bank of India (Non-Banking Financial Companies - Concentration Risk Management) Directions, 2025 (Updated as on July 01, 2026)
UR
- Applies toFinance companies
- StatusIn force
- ImportanceMUST READ
- IssuedNov 28, 2025
- Last amendedAug 25, 2026 · 4 incorporated
- Length50 points in 5 sections · 5 min read
The four dates on this rule
- PublishedNov 28, 2025The day RBI put this document out.
- Starts to applyNot statedNot stated separately in this document. Read the rule itself before you assume a start date.
- Time to get readyNot statedCannot be worked out until the day it starts to apply is known.
- Last date to actNot statedNo date to act by was found in this document. Other dates may sit inside single paragraphs.
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46 of the 50 points name no product and bind every product. All products.
Numbers to remember
| 50 per cent | Owning more than 50 per cent of the votes settles control at once. RBI Para 4(3) |
| five per cent | The hunt for linked firms starts only above five per cent of the capital base. RBI Para 4(3) |
| 10 per cent | For an upper layer company, 10 per cent or more of capital is a large exposure. RBI Para 4(5) |
| ₹1 crore | Lending for a public share issue is capped at ₹1 crore for each borrower. RBI Para 11 |
| 25 per cent | A middle layer company may lend one party 25 per cent of Tier 1 capital. RBI Para 13(1) |
| 40 per cent | For one group of parties the limit is 40 per cent of Tier 1 capital. RBI Para 13(2) |
| 30 per cent | An infrastructure finance company may lend one party 30 per cent of Tier 1 capital. RBI Para 14(1) |
| 20 per cent | A State guarantee moves the exposure onto that State at 20 per cent risk weight. RBI Para 17(3) |
| 80 per cent | Cover bought on a traded bond counts up to 80 per cent. RBI Para 30(5) |
| 5 per cent | The board may allow 5 per cent above 20 per cent, never past 25 per cent. RBI Para 34 |
What it says
Chapter I. Preliminary
Must know
1. Starts at once
The rules start the moment RBI issues them.
2. Who must follow this
These rules apply to most non-banking finance companies.
3. Government owned now covered
A government owned company now follows the limits of its own layer.
4. Three layers, three rule sets
The rules differ by layer: base, middle and upper.
5. Lower layer rules climb up
A base layer rule also binds the middle and upper layers.
6. Capital means Tier 1
The capital base for these limits is Tier 1 capital.
7. Half the votes means control
Owning more than 50 per cent of the votes settles control at once.
8. Half the income from one
Two firms are linked if half of one firm's income comes from the other.
9. Five per cent starts checking
The hunt for linked firms starts only above five per cent of the capital base.
10. What a large exposure is
For an upper layer company, 10 per cent or more of capital is a large exposure.
Do it
11. An auditor must certify
An outside auditor must certify new capital before it is counted.
Background
12. Peer to peer left out
A peer to peer lending platform is outside these rules.
Chapter II. Guidelines Applicable to NBFC – Base Layer
1. Nothing to the promoter group
A company under a holding company may not lend to its promoter group.
2. Top up loans unsecured
A top up loan against a vehicle is treated as unsecured.
3. One crore for share issues
Lending for a public share issue is capped at ₹1 crore for each borrower.
4. Base layer board policy
A base layer company needs a board policy on this risk.
5. Unsecured consumer credit limits
The board must set a limit for every unsecured consumer loan.
Chapter III. Guidelines Applicable to NBFC – Middle Layer
Must know
1. Middle layer single party
A middle layer company may lend one party 25 per cent of Tier 1 capital.
2. Middle layer group limit
For one group of parties the limit is 40 per cent of Tier 1 capital.
3. Infrastructure companies get more
An infrastructure finance company may lend one party 30 per cent of Tier 1 capital.
4. Its group limit is fifty
For a group, the infrastructure finance company limit is 50 per cent.
5. Capital from latest accounts
Tier 1 capital comes from the latest accounts, audited or reviewed.
6. No public funds, no limits
A company taking no public funds and giving no guarantees is outside these limits.
7. State guarantee shifts the risk
A State guarantee moves the exposure onto that State at 20 per cent risk weight.
8. Government guarantee is exempt
A loan fully guaranteed by the Government of India is outside these limits.
9. Factoring with recourse
In factoring with recourse the exposure is on the seller of the bill.
10. Factoring without recourse
Without recourse, the exposure is on the person who owes the money.
11. Two sensitive sectors named
Capital market lending and commercial property lending are the sensitive sectors.
Do it
12. Middle layer board policy
A middle layer company needs one too, covering the sensitive sectors.
13. A sub-limit for land
Inside the property limit, buying land needs its own inner limit.
Chapter IV. Guidelines Applicable to NBFC – Upper Layer
Must know
1. Bond cover counts four fifths
Cover bought on a traded bond counts up to 80 per cent.
2. Upper layer single counterparty
An upper layer company may lend one counterparty 20 per cent of its capital base.
3. Board can add five more
The board may allow 5 per cent above 20 per cent, never past 25 per cent.
BankPulse example. An upper layer finance company lends to one borrower. The normal ceiling is 20 per cent of its capital base. The board may allow 5 per cent more for a special case, with the reason written down. Even then the total can never pass 25 per cent.
4. Upper layer group limit
For a linked group the limit is 25 per cent of the capital base.
5. Twenty five is the stop
Whatever the reason, one counterparty may never pass 25 per cent.
6. Clearing house counts as nil
Derivative and securities funding deals with a clearing house count as zero.
7. Margin with them still counts
Money left as margin with a clearing house is still counted.
8. A breach must be fixed
A breach may only happen in rare cases outside control.
9. No new deals until cured
While a limit is crossed, no fresh exposure may be taken.
10. Penalty can follow
Not meeting the limit can bring a penalty from the supervisor.
Do it
11. Upper layer board policy
An upper layer company needs one covering linked groups and sector limits.
12. Reasons must be written down
The special reason for going beyond 20 per cent must be written down.
13. A policy for linked firms
The board must approve how linked counterparties are found.
14. Report large exposures
Large exposures must be reported to RBI on the form given.
15. The ten biggest always
The 10 biggest exposures are reported whatever their size.
16. A limit on lending others
The board must also set a limit for lending to other such companies.
Chapter V. Repeal and other provisions
1. The old rules are gone
All earlier concentration risk instructions for these companies stand repealed.
2. Old actions still stand
Anything already done under the old rules is still judged by them.
3. Other laws still apply
These rules sit on top of other laws. They do not take the place of them.
4. RBI's reading is final
Where the wording is unclear, RBI's own reading of it is final.
How this rule has changed
The points above are the rule as it stands today, after every change listed here.
Issued on Nov 28, 2025. This is the date RBI put the rule out.
Changed on Jan 01, 2026.
- Working capital comfort. The borrower must have firm internal or external funding to meet all present and future project funding needs.
- Limits on extra borrowing. The borrower must not raise more debt or charge project assets or cash flows without consent from existing lenders.
- When rules apply. These amendment rules apply when a non-banking financial company adopts the linked capital adequacy amendments or from April 1, 2026.
Changed on Mar 10, 2026.
- Directions start now. These amendment rules apply at once from the date of this letter.
- Owned fund meaning. Owned fund must follow the meaning given in Chapter II of the 2025 capital adequacy norms.
- Tier 1 meaning. Tier 1 capital must follow the meaning given in Chapter II of the 2025 capital adequacy norms.
- Tier 1 definition for norms. For these norms, Tier 1 capital meaning must match paragraph 10 of the 2025 capital adequacy norms directions.
Changed on Jun 24, 2026.
- Start date. These amendment rules apply from the issue date of this document.
- Govt NBFC norms. A Government owned NBFC must now follow concentration limits for its regulatory layer.
- Govt NBFC exemption end. Earlier exemptions from concentration rules for Government owned NBFCs are now removed.
- Delete para 19. Paragraph 19 under Middle Layer guidelines is removed.
Changed on Aug 25, 2026.
- Who it covers. The new large exposure rule applies to Infrastructure Debt Fund-NBFCs in the Upper Layer.
- Immediate effect. These amendment rules take effect at once from the date of issue.
The same subject for other kinds of institution
The same subject for other kinds of institution.
Other RBI rules for NBFCs
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