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JC - Legal Updates - Thresholds calculation - Middle layer NBFCs

Legal Updates

14 Oct 2022

Thresholds calculation - Middle layer NBFCs

Brief Overview

RBI has clarified that in case there are multiple NBFCS in a group then   assets size threshold for middle layer NBFCs shall be calculated on consolidated basis. The relevant RBI circular shall be effective from 1st October 2022.

Technical Details:

Some of the key highlights of the circular are:

1)   It clarifies that the total assets of all the non-banking financial companies (“NBFCs”) in a Group or are floated by a common set of promoters shall be consolidated to determine the threshold for their classification in the “Middle Layer”.

2)  In view of the classification of NBFCs in the “Middle Layer” i.e., if the consolidated asset size of the Group is INR 1000,00,00,000 (Indian Rupees One Thousand Crore) and above, the Framework for Scale Based Regulation for Non-Banking Financial Companies dated 22nd October 2021 shall be applicable to such NBFCs.

3)  Statutory auditors are required to certify the asset size (as on 31st March) of all the NBFCs in a Group every year.

4)   It has also clarified that the Notification will not be applicable for classifying an NBFCs in the Upper Layer.

For further details, please see:

Multiple NBFCs in a Group: Classification in Middle Layer dated 11th October 2022.

For any queries / clarifications, please feel free to ping us and we will be happy to chat:

●  Mr. Ankit Sinha (ankit.sinha@jclex.com)

●  Mr. Saurabh Sharma (saurabh.sharma@jclex.com)

●  Ms. Rupul Jhanjee (rupul.jhanjee@jclex.com)