Multiple NBFCs in a Group: Classification in Middle Layer

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Dec 31, 2022

Multiple NBFCs in a Group: Classification in Middle Layer

RBI has issued a Circular on October 11, 2022, to clarify the position of Investment and Credit Company (‘NBFC-ICC’), Micro Finance Institution (‘NBFC-MFI’), NBFC-Factor and Mortgage Guarantee Company (‘NBFC-MGC’) forming part of a ‘group’. Where the consolidated asset size of all non-banking financial companies (‘NBFCs’) in a group is ₹1000 crore (approx. US$ 123 million) and above, then each NBFC-ICC, NBFC-MFI and NBFC-MGC lying in the group will be classified as an NBFC in the middle layer, and consequently regulations as applicable to the middle layer will be applicable to such NBFCs. Statutory auditors are required to certify the asset size (as on March 31) of all the NBFCs in the group every year and furnish a certificate to the concerned department in whose jurisdiction the NBFCs are registered. This Circular is not applicable to an NBFC classified as an upper layer.

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