An NBFC can lend you money, but it can’t take your savings account. That one restriction defines almost everything else about how India regulates these companies.
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NBFC Scale-Based Regulation, Four Layers
Bigger NBFCs face tighter rules, closer to bank-level regulation
Base Layer (NBFC-BL)Non-deposit-taking NBFCs, assets below ₹1,000 crore
Middle Layer (NBFC-ML)Deposit-taking NBFCs and larger non-deposit-taking ones
Upper Layer (NBFC-UL)17 large NBFCs (FY27 list), assets above ₹1 lakh crore, bank-like oversight
Top Layer (NBFC-TL)Reserved for extreme systemic risk — empty as of 2026
What sets NBFCs apart from banks: no demand deposits, no cheques drawn on themselves, and no DICGC deposit insurance for their depositors.
🏛️ Must Know
1. What NBFCs Cannot Do
- No Demand Deposits NBFCs cannot accept demand deposits, the kind withdrawable on demand, like a savings or current account. Some NBFCs may accept term deposits instead.
- No Cheques NBFCs do not form part of the payment and settlement system. They cannot issue cheques drawn on themselves, unlike banks.
- No DICGC Cover Deposit insurance from the Deposit Insurance and Credit Guarantee Corporation (DICGC) is not available to depositors of deposit-taking NBFCs. DICGC covers only bank deposits.
2. Registration Is Not Universal
- Not All Register Not every NBFC operating in India has to register with the RBI. Most must register under Section 45-IA of the RBI Act, but specific categories get exemptions, avoiding overlap with other regulators.
- Common Trap A frequent exam trap claims all NBFCs must register with the RBI. That overstates the rule; genuine exemptions exist.
🏘️ Good to Know
The Four-Layer Scale-Based Framework
- Base Layer The Base Layer (NBFC-BL) covers non-deposit-taking NBFCs with assets below ₹1,000 crore, facing the lightest regulation.
- Middle Layer The Middle Layer (NBFC-ML) covers deposit-taking NBFCs and larger non-deposit-taking ones, holding the bulk of total NBFC assets.
- Upper Layer The Upper Layer (NBFC-UL) covers the largest, systemically important NBFCs, with assets above ₹1 lakh crore. These face bank-like regulatory scrutiny for at least 5 years.
- Top Layer The Top Layer (NBFC-TL) is a precautionary category for an NBFC the RBI judges to pose an unusually high systemic risk. As of 2026, no NBFC sits in this layer.
Test Yourself
📰 Current Affairs
RBI’s FY27 Upper Layer List
- 6 Aug 2026 RBI released its FY27 Upper Layer (NBFC-UL) list, naming 17 NBFCs, up from 15 the previous year. (Source: RBI, reported by Adda247 and other outlets)
- New Additions Four public-sector entities joined the list for the first time: REC, Power Finance Corporation (PFC), Indian Railway Finance Corporation (IRFC), and HUDCO.
- Familiar Names Bajaj Finance, Shriram Finance, LIC Housing Finance, and Tata Capital are among the other prominent NBFCs on the FY27 list.
- Eligibility Under the revised norms, NBFCs need assets under management of at least ₹1 lakh crore to qualify for Upper Layer consideration.
- Tata Sons Tata Sons remains on the Upper Layer list. RBI clarified that this is without prejudice to Tata Sons’ pending application for de-registration as an NBFC, which is still under examination.
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