RBI releases list of Non-Banking Financial Company (NBFCs) in the Upper Layer (NBFC-UL) for 2024-25 | Current Affairs | Vision IAS
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  • The list includes LIC Housing Finance Limited, PNB Housing Finance Limited, Shriram Finance Limited etc. and is in accordance with  Scale Based Regulation (SBR) , a regulatory framework for NBFCs.
    • Once an NBFC is classified as NBFC-UL, it is subjected to enhanced regulatory requirement, at least for a period of 5 years
  • The framework has been introduced to mitigate contagion or systemic risks, apply the principle of proportionality in regulation and strengthen quality and improve risk management of NBFCs.

Non-Banking Financial Company

  • Registration:  under Companies Act, 1956.
  • Objective: engaged in lending activities, but excludes institutions mainly involved in agriculture, industrial activity, trading goods (except securities), and providing any services and sale/purchase/construction of immovable property.
  • Different from banks, as they cannot accept demand deposits (accepts only term deposits), are not part of payment & settlement system, and cannot issue cheques drawn on themselves.
  • Deposit insurance facility is not available to depositors of NBFCs.

 

 

 

Scale Based Regulation Framework for NBFC

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