The Reserve Bank of India (RBI) has placed 17 Non-Banking Financial Companies (NBFCs) in the Upper Layer for FY 2026-27, using their financial position as of March 31, 2026. Rural Electrification Corporation, Power Finance Corporation, Indian Railway Finance Corporation and Housing and Urban Development Corporation are the four new entrants, while Tata Sons remains on the list. The classification brings these large financial institutions under enhanced regulatory requirements because their size and activities can affect financial stability.
RBI’s FY27 Upper Layer List
The RBI released the FY27 list on August 6, 2026. An NBFC is a company whose principal business involves financial activities such as lending, investment or financing, but which is not a bank. NBFCs can provide credit to households, businesses and infrastructure projects, although they do not perform all the functions of commercial banks.
The 17 entities and their RBI categories are listed below:
| NBFC | Category |
|---|---|
| Rural Electrification Corporation Limited | Infrastructure Finance Company |
| Power Finance Corporation Limited | Infrastructure Finance Company |
| Indian Railway Finance Corporation Limited | Infrastructure Finance Company |
| Bajaj Finance Limited | Deposit-taking NBFC-ICC |
| Shriram Finance Limited | Deposit-taking NBFC-ICC |
| LIC Housing Finance Limited | Deposit-taking Housing Finance Company |
| Cholamandalam Investment and Finance Company Limited | Non-deposit-taking NBFC-ICC |
| Tata Capital Limited | Non-deposit-taking NBFC-ICC |
| Tata Sons Private Limited | Core Investment Company |
| Muthoot Finance Limited | Non-deposit-taking NBFC-ICC |
| Aditya Birla Capital Limited | Non-deposit-taking NBFC-ICC |
| Housing and Urban Development Corporation Limited | Infrastructure Finance Company |
| Mahindra & Mahindra Financial Services Limited | Deposit-taking NBFC-ICC |
| L&T Finance Limited | Non-deposit-taking NBFC-ICC |
| Bajaj Housing Finance Limited | Non-deposit-taking Housing Finance Company |
| HDB Financial Services Limited | Non-deposit-taking NBFC-ICC |
| Piramal Finance Limited | Non-deposit-taking NBFC-ICC |
Here, NBFC-ICC means Non-Banking Financial Company, Investment and Credit Company. HFC means Housing Finance Company. A deposit-taking NBFC can accept deposits under the conditions permitted by the RBI, while a non-deposit-taking NBFC cannot accept public deposits.
Why the Upper Layer Matters
The RBI introduced the Scale-Based Regulation (SBR) framework to regulate NBFCs according to their size, activities and risk profile. The framework came into effect on October 1, 2022, replacing a system that focused mainly on whether a non-deposit-taking NBFC was systemically important. Larger and more interconnected entities receive closer supervision because their failure can spread stress through lenders, borrowers and financial markets.
The framework has four layers:
| Layer | Meaning |
|---|---|
| Base Layer, NBFC-BL | Smaller and less complex NBFCs with relatively lower systemic significance |
| Middle Layer, NBFC-ML | Larger NBFCs and specified entities that require stronger prudential oversight |
| Upper Layer, NBFC-UL | NBFCs specifically identified by the RBI as requiring enhanced regulation |
| Top Layer, NBFC-TL | A layer intended to remain empty unless systemic risk rises substantially in a particular Upper Layer NBFC |
The RBI’s revised framework now identifies an NBFC for the Upper Layer when its assets are ₹1 lakh crore or more, based on its latest audited balance sheet for the financial year. This replaced the earlier method, which combined the top ten eligible NBFCs by asset size with a scoring model based on quantitative and qualitative indicators. The new threshold is simpler and applies without giving government ownership a separate regulatory advantage.
The RBI did not publish a separate NBFC-UL list for FY26 because it was reviewing the identification criteria during 2025-26. The FY27 list was prepared after the revised criteria were issued and uses financial information as of March 31, 2026.
Four Government-Owned NBFCs Enter the List
The four new entrants are REC Limited, Power Finance Corporation Limited, Indian Railway Finance Corporation Limited and Housing and Urban Development Corporation Limited. All four are classified as Infrastructure Finance Companies, which are NBFCs that provide long-term finance for infrastructure projects. Their inclusion shows that the revised framework applies the same size-based test to public-sector and private-sector entities.
REC finances projects across the power sector, including electricity generation, transmission and distribution. PFC, which operates under the Ministry of Power, provides finance to power-sector institutions and projects. These two institutions are closely linked to the expansion and modernisation of India’s electricity system.
IRFC is associated with the financing of Indian Railways’ rolling stock and infrastructure. HUDCO focuses on housing and urban infrastructure finance. The presence of all four institutions in the Upper Layer places major public-sector financiers within the RBI’s enhanced prudential perimeter, while their status as NBFCs remains distinct from that of banks.
The revised approach also removes the earlier distinction that kept government-owned NBFCs in the Base or Middle Layer. This is an ownership-neutral regulatory approach. It means that the potential impact of an institution’s balance sheet, rather than its ownership alone, determines the intensity of supervision.
Tata Sons Remains an Upper Layer NBFC
Tata Sons Private Limited continues to appear in the FY27 list as a Core Investment Company (CIC). A CIC is a company whose main activity is holding investments in group companies and managing those investments, rather than directly conducting a range of operating businesses. Tata Sons was first classified as an NBFC-UL in 2022.
The RBI has stated that Tata Sons’ inclusion is without prejudice to its application for de-registration, which remains under examination. Therefore, the FY27 list confirms its current regulatory classification but does not settle whether Tata Sons will eventually surrender its NBFC registration.
Upper Layer classification normally carries a requirement to list on stock exchanges within three years of identification. The June 2026 regulatory changes exempt NBFC-ULs that are fully owned and controlled by the government from this listing requirement. That exemption is relevant to the four new public-sector entrants, but it does not by itself resolve Tata Sons’ position. Its future listing obligation depends on the outcome of the pending de-registration application and the RBI’s applicable directions.
Regulatory Impact of the Classification
An NBFC-UL must follow enhanced regulatory requirements for at least five years from the date of its classification. This rule continues to apply even if the entity does not meet the identification criteria in a later year. The provision prevents a company from moving in and out of the stricter regime because of short-term changes in its asset size.
The Upper Layer framework strengthens board oversight, risk management, financial disclosures, capital planning and supervision of exposures. It also gives greater importance to concentration risk, which arises when a financial company has a large exposure to one borrower, sector or group. These safeguards are designed to reduce the chance that financial stress at a large NBFC will affect other parts of the financial system.
Two companies identified in the previous exercise, PNB Housing Finance Limited and Sammaan Capital Limited, do not appear in the principal FY27 table. However, both continue to remain subject to the enhanced Upper Layer requirements under the five-year rule. Thus, the published FY27 table has 17 entities, while two earlier classifications continue to have regulatory effect.
The list also signals a wider role for public-sector NBFCs in the RBI’s risk-based supervisory framework. REC, PFC, IRFC and HUDCO finance electricity, railways, housing and urban infrastructure. Their inclusion can improve consistency in prudential oversight of large balance sheets, especially in sectors where government-backed institutions have a major role in long-term project finance.
Key Takeaways
- The RBI identified 17 NBFCs in the Upper Layer for FY 2026-27 using financial data as of March 31, 2026.
- REC, PFC, IRFC and HUDCO were the four new public-sector entrants in the FY27 NBFC-UL list.
- The revised framework uses an asset threshold of ₹1 lakh crore or more to identify eligible NBFCs for the Upper Layer.
- The four layers under Scale-Based Regulation are Base, Middle, Upper and Top.
- Tata Sons remains classified as an Upper Layer NBFC and its de-registration application is still under examination by the RBI.
- PNB Housing Finance and Sammaan Capital remain subject to enhanced Upper Layer requirements under the five-year continuation rule, despite not appearing in the principal FY27 table.
