The Reserve Bank of India has announced a Scale-Based Regulation of Non-Banking Finance Companies (NBFCs), which include a ceiling on IPO funding per borrower as well as changes in the minimum net owned fund, classification of non-performing assets, and capital requirements. Under the new framework, the regulatory structure for NBFCs shall comprise four layers based on their size, activity, and perceived riskiness — base, middle, upper and top layer. Exposure to the capital market (direct and indirect) and commercial real estate shall be reckoned as sensitive exposure for NBFCs.

While the overall guidelines shall be effective from October 1, 2022, the instructions relating to the ceiling on IPO funding will come into effect from April 1, 2022.