RBI SBR Layer Reclassification April 2026: What Revised Thresholds Mean for Your NBFC

On 29 April 2026, the RBI announced revisions to the Scale-Based Regulation (SBR) asset-size thresholds that determine NBFC layer classification. The framework Base, Middle, Upper, and Top Layers remains unchanged in structure, but the asset-size cutoffs defining each layer have been updated to reflect NBFC sector growth since the SBR framework was introduced in 2021.

RBI SBR reclassification in April 2026 means that some NBFCs previously classified as Base Layer will now move to Middle Layer, with significantly expanded regulatory obligations. Others already in the Middle Layer may cross the Upper Layer threshold. This guide covers the revised thresholds that NBFCs are affected by and what the transition entails.

The SBR Framework Recap and Why Thresholds Were Revised

The SBR framework introduced in 2021 classified NBFCs by asset size and systemic importance into four regulatory tiers, with proportionally stricter requirements at each higher tier. The original thresholds set the Base-to-Middle Layer boundary at Rs 1,000 crore in assets.

Since 2021, the NBFC sector has grown significantly both in aggregate AUM and in the assets of individual entities. Many NBFCs that were comfortably within the Base Layer in 2021 have now crossed or approached the original Rs 1,000 crore threshold. The RBI’s threshold revision reflects two objectives: ensuring the middle layer captures NBFCs with genuine systemic significance, and reducing the compliance burden on smaller entities whose growth has pushed them technically into Middle Layer without commensurate systemic importance.

Revised Asset-Size Thresholds from April 2026

Revised SBR thresholds from the April 2026 announcement (specific figures based on the RBI announcement):

• Base Layer (NBFC-BL): non-deposit-taking NBFCs with assets below Rs 2,500 crore. The RBI raised the threshold from Rs 1,000 crore, keeping many fast-growing but non-systemically important NBFCs in the lighter-touch Base Layer.
• Middle Layer (NBFC-ML): non-deposit-taking NBFCs with assets above Rs 2,500 crore, all deposit-taking NBFCs regardless of size, HFCs, and Core Investment Companies.
• Upper Layer (NBFC-UL): the top 15 NBFCs by asset size, specifically identified by the RBI, unchanged in approach, but the asset size implied by the top 15 has increased as the sector has grown.
• Top Layer (NBFC-TL) remains empty by design. Reserved for entities posing heightened systemic risk requiring near-bank-level regulation.

Which NBFCs Move Layers Under the Revised Thresholds

The April 2026 threshold revision affects three categories of NBFCs:

NBFCs with assets between Rs 1,000 crore and Rs 2,500 crore in assets: these entities were classified as Middle Layer under the original thresholds and now move back to Base Layer. This is a regulatory relief; they shed Middle Layer obligations (mandatory CCO, Risk Management Committee, CRILC reporting above Rs 5 crore) and revert to the lighter Base Layer framework.

NBFCs approaching Rs 2,500 crore: NBFCs between Rs 2,000 crore and Rs 2,500 crore in assets should plan for a Middle Layer transition. Asset growth trajectories at current sector growth rates suggest many will cross the new threshold within 12 to 24 months.

NBFCs newly crossing into Upper Layer: as the absolute asset size of the top 15 has increased with sector growth, some NBFCs that were not previously Upper Layer may now qualify. The RBI will publish the updated Upper Layer list following the April 2026 announcement.

What Moving from Base to Middle Layer Requires

Base to Middle Layer transition requirements applicable to NBFCs crossing Rs 2,500 crore in assets going forward:

• Board committees: Risk Management Committee, Audit Committee, Nomination and Remuneration Committee all mandatory with specified composition requirements.
• CCO appointment: Chief Compliance Officer with a direct Board reporting line for NBFCs above Rs 5,000 crore in the Middle Layer. (NBFCs with assets between Rs 2,500 crore and Rs 5,000 crore remain in the Middle Layer. However, they fall below the CCO threshold. Therefore, check the specific threshold in the Governance Directions 2025.)
• CRILC reporting: mandatory for credit exposures above Rs 5 crore at SMA-1 and above, requiring reporting infrastructure integration with the RBI’s CRILC system.
• Quarterly portfolio stress testing: sensitivity analysis and stress testing of the credit portfolio presented to the Risk Management Committee quarterly.
• Liquidity management framework: NBFCs must establish a formal liquidity risk management framework. In addition, deposit-taking Middle Layer entities must comply with the LCR requirements.

Transition Period and Compliance Timeline

For NBFCs that are downgraded from Middle Layer to Base Layer under the revised thresholds:

The regulatory relief takes effect from the date the RBI communicates the revised layer classification to the specific entity. There is no requirement to maintain Middle Layer-level infrastructure once the entity has been formally reclassified to Base Layer. However, NBFCs that have already built Middle Layer-calibre governance and risk infrastructure should maintain their asset growth trajectory. As a result, they may reach Rs 2,500 crore again within a few years.

For NBFCs that are upgraded from Base Layer to Middle Layer:

A transition period is typically specified, usually 12 months from the date of reclassification, for the NBFC to implement the full Middle Layer compliance framework. Priority actions during the transition: board committee formation, CCO appointment process, CRILC reporting system integration, and stress testing framework development.

Key Takeaways

• RBI SBR reclassification April 2026 raises the Base-to-Middle Layer asset threshold from Rs 1,000 crore to Rs 2,500 crore, providing regulatory relief to NBFCs in the Rs 1,000 to Rs 2,500 crore range while appropriately calibrating the framework to current NBFC sector scale.
• NBFCs between Rs 1,000 crore and Rs 2,500 crore in assets move from Middle Layer back to Base Layer, shedding mandatory CCO, Risk Management Committee, and CRILC reporting requirements.
• NBFCs approaching Rs 2,500 crore should plan for Middle Layer transition proactively asset growth trajectories at current sector rates suggest many will cross within 12 to 24 months.
• Transition timelines allow NBFCs 12 months from reclassification to implement the full new-layer compliance framework.

Frequently Asked Questions

Conclusion

RBI SBR reclassification April 2026 is a pragmatic recalibration of the SBR framework to match the realities of NBFC sector growth since 2021. Raising the Base-to-Middle threshold to Rs 2,500 crore removes disproportionate compliance burden from a group of growing-but-not-systemically-important NBFCs.

For affected entities, the immediate priority is confirming revised layer classification with the RBI, planning the transition period actions, and communicating the compliance status changes to investors and co-lending partners for whom the NBFC’s regulatory tier may be a portfolio decision factor.