Some holding companies and Non-Banking Financial Companies (NBFCs) are reportedly restructuring their assets and income streams to circumvent stricter regulatory scrutiny from the RBI. This practice, known as , aims to avoid higher capital and governance norms.
9,496
Estimated NBFCs
March 2026: 9,496→9,496
⏳ Time Machine
How today’s news fits into the bigger picture
2018
IL&FS Crisis Exposes NBFC Risks
The collapse of IL&FS, a major NBFC, highlighted systemic risks from the sector, leading to calls for tighter regulation of NBFCs.
October 2022
RBI Implements Scale-Based Regulation
The Reserve Bank of India's (RBI) Scale Based Regulation (SBR) for NBFCs became fully effective, categorizing entities into four layers with differentiated regulatory requirements.
March 2026
NBFC Count Reaches 9,496
The number of NBFCs in India was estimated at 9,496, indicating a large and diverse sector under RBI's supervision.
Today
Holding companies and NBFCs are rejigging assets to avoid stricter RBI scrutiny.
What happens next?
The RBI is likely to review its scale-based regulation framework to address loopholes and enhance surveillance of entities engaging in regulatory arbitrage.
A number of holding companies and Non-Banking Financial Companies (NBFCs) are actively rejigging their asset portfolios and income compositions to avoid falling under the Reserve Bank of India's (RBI) most stringent regulatory categories. These entities are utilizing strategies to keep their asset sizes below specific thresholds, thereby escaping the enhanced capital, governance, and disclosure norms applicable to upper and middle-layer NBFCs. This practice of regulatory arbitrage is a direct response to the RBI's scale-based regulation framework, which aims to tighten oversight on larger and more interconnected financial entities.
💭 If you're wondering…
SBR is a regulatory framework implemented by the RBI that classifies NBFCs into different layers based on their size, activity, and systemic importance, applying stricter prudential and governance norms to larger and more complex entities.
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