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.

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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)

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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

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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.

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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

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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