Types of NBFC in India: The Short Answer
The RBI classifies NBFCs (Non-Banking Financial Companies) in three ways: (1) by liabilities, into deposit-taking (NBFC-D) and non-deposit-taking NBFCs; (2) by size and risk under Scale Based Regulation (SBR), into Base, Middle, Upper and Top Layer; and (3) by activity, into types such as Investment and Credit Company (ICC), Housing Finance Company (HFC), Infrastructure Finance Company (IFC), IDF-NBFC, Core Investment Company (CIC), NBFC-MFI, NBFC-Factor, NBFC-P2P, Account Aggregator, NOFHC, Mortgage Guarantee Company and Standalone Primary Dealer.
Key takeaway for bank exams: From June 2026 an NBFC enters the Upper Layer simply if its assets are ₹1 lakh crore (₹1,00,000 crore) or more. The RBI's 2026-27 Upper Layer list has 17 NBFCs (plus 2 that stay on for the five-year rule). The middle-layer line is still ₹1,000 crore. Learn the percentages in the activity table (60%, 75%, 90%, 50%) because exams turn them into options.
Facts here are taken from the RBI's NBFC – Registration, Exemptions and Framework for Scale Based Regulation Directions, 2025 (updated 1 July 2026), the RBI NBFC FAQs (updated 15 September 2026) and the RBI press release of 6 August 2026. Read this with banking terms A to Z if any word is new.
What Is an NBFC? Meaning and Principal Business Test
An NBFC is a company registered under the Companies Act that lends, invests or does other financial business as its principal business, and is registered with the RBI under Section 45-IA of the RBI Act 1934.
Principal business test (50-50 rule): a company is treated as an NBFC if financial assets are more than 50% of total assets (net of intangible assets) and income from financial assets is more than 50% of gross income. Both conditions must be met.
Difference Between Bank and NBFC (Most Asked)
| Point | Bank | NBFC |
|---|---|---|
| Demand deposits (savings, current) | Can accept | Cannot accept |
| Cheques drawn on itself | Can issue | Cannot issue; not part of the payment and settlement system |
| DICGC deposit insurance | Yes (up to ₹5 lakh) | No, even for deposit-taking NBFCs |
| Licence / registration | Banking licence under the BR Act 1949 | Certificate of Registration under Section 45-IA of the RBI Act 1934 |
| CRR / SLR | Must maintain | No CRR; liquidity rules apply instead |
| Deposit tenure (NBFC-D only) | Any | 12 to 60 months only, interest capped at 12.5% |
Only RBI-approved NBFC-D can take public deposits, and only if rated at least BBB− by a SEBI-registered rating agency, up to 1.5 times their Net Owned Fund.
Types of NBFC as per Scale Based Regulation (Base, Middle, Upper, Top Layer)
The SBR framework was announced in October 2021 and applies from 1 October 2022. Its rules now sit in the RBI Directions of 28 November 2025.
| Layer | Who is in it | Points to remember |
|---|---|---|
| Base Layer (NBFC-BL) | Non-deposit-taking NBFCs with assets below ₹1,000 crore, plus all NBFC-P2P, NBFC-AA, NOFHC and Type I NBFCs | Lightest regulation; old "NBFC-ND" now means NBFC-BL |
| Middle Layer (NBFC-ML) | All deposit-taking NBFCs (any size), non-deposit NBFCs with assets ₹1,000 crore and above, plus all SPD, IDF-NBFC, CIC, HFC and NBFC-IFC | Old "NBFC-D" and "NBFC-ND-SI" now mean ML or UL |
| Upper Layer (NBFC-UL) | NBFCs with assets of ₹1,00,000 crore and above (rule since the RBI amendment of 24 June 2026) | Enhanced rules for at least 5 years once classified; threshold reviewed every 3 years |
| Top Layer (NBFC-TL) | Ideally empty | Filled only if the RBI sees a big rise in systemic risk from an Upper Layer NBFC |
Which types can sit where:
- Always Base Layer: NBFC-P2P, NBFC-AA, NOFHC, Type I NBFC.
- Never Base Layer (Middle or Upper): NBFC-D, CIC, NBFC-IFC, HFC.
- Always Middle Layer: SPD and IDF-NBFC.
- Any layer, depending on size: NBFC-ICC, NBFC-MFI, NBFC-Factor, Mortgage Guarantee Company.
Types of NBFC Based on Activity (List with Definitions)
| Type | What it does | Key condition (RBI) |
|---|---|---|
| NBFC-ICC (Investment and Credit Company) | Asset finance, loans and investment in securities | Default category if no other type fits (AFC, LC and IC were merged into ICC in February 2019) |
| HFC (Housing Finance Company) | Home loans | At least 60% of total assets in housing finance, and at least 50% of total assets as housing finance to individuals |
| NBFC-IFC (Infrastructure Finance Company) | Infrastructure loans | At least 75% of total assets in infrastructure lending; non-deposit-taking |
| IDF-NBFC (Infrastructure Debt Fund) | Refinances operating infrastructure projects | Refinances projects with at least 1 year of satisfactory commercial operation; can directly fund toll-operate-transfer (TOT) projects |
| CIC (Core Investment Company) | Holds shares and loans of its group companies | At least 90% of net assets in group companies, of which at least 60% in equity; registration needed if assets ₹100 crore+ and it uses public funds |
| NBFC-MFI (Micro Finance Institution) | Small collateral-free loans | At least 60% of total assets in microfinance loans (was 75% earlier); microfinance loan = collateral-free loan to a household with annual income up to ₹3 lakh |
| NBFC-Factor | Factoring (buying receivables) | At least 50% of assets and 50% of income from factoring; registered under the Factoring Regulation Act 2011 |
| NBFC-P2P | Online platform linking lenders and borrowers | Platform only; always Base Layer |
| NBFC-AA (Account Aggregator) | Collects and shares a customer's financial data with consent | Does not lend; always Base Layer |
| NOFHC (Non-Operative Financial Holding Company) | Holds a bank and the group's other financial companies | Non-deposit-taking; always Base Layer |
| MGC (Mortgage Guarantee Company) | Guarantees home loans to lenders | At least 90% of turnover or gross income from mortgage guarantee business |
| SPD (Standalone Primary Dealer) | Deals in government securities | Registered as an NBFC; always Middle Layer |
HFC fact: Housing Finance Companies have been regulated by the RBI since August 2019 (moved from the National Housing Bank by the Finance (No. 2) Act 2019); the NHB still supervises them.
Type I and Type II NBFC: New 2026 Rule
From 1 July 2026, an NBFC that uses no public funds and has no customer interface is a Type I NBFC; all others are Type II.
- A Type I NBFC with assets below ₹1,000 crore is exempt from registration (Sections 45-IA and 45-IC). Existing ones may apply for de-registration by 31 December 2026.
- A Type I NBFC with assets ₹1,000 crore or more must hold a Type I Certificate of Registration and stays in the Base Layer.
- If it wants public funds or customer contact later, it must register as Type II.
Net Owned Fund (NOF) for Different Types of NBFC
| NBFC type | Minimum NOF |
|---|---|
| NBFC-ICC, NBFC-MFI, NBFC-Factor | ₹10 crore (glide path ends 31 March 2027) |
| NBFC-P2P, NBFC-AA, Type I NBFC | ₹2 crore |
| NBFC-IFC, IDF-NBFC | ₹300 crore |
Glide path for existing NBFCs: ICC ₹2 crore → ₹5 crore by 31 March 2025 → ₹10 crore by 31 March 2027; MFI and Factor ₹5 crore → ₹7 crore → ₹10 crore. An NBFC that misses the level loses eligibility to hold its registration.
NBFC Upper Layer List 2026-27 (RBI, 6 August 2026)
RBI did not issue a 2025-26 list because it was reviewing the criteria. The 2026-27 list, based on 31 March 2026 financials, has 17 NBFCs:
| No. | NBFC | Category |
|---|---|---|
| 1 | REC Limited | IFC |
| 2 | Power Finance Corporation | IFC |
| 3 | Indian Railway Finance Corporation | IFC |
| 4 | Bajaj Finance | Deposit-taking NBFC-ICC |
| 5 | Shriram Finance | Deposit-taking NBFC-ICC |
| 6 | LIC Housing Finance | Deposit-taking HFC |
| 7 | Cholamandalam Investment and Finance | NBFC-ICC |
| 8 | Tata Capital | NBFC-ICC |
| 9 | Tata Sons Private Limited | CIC (its de-registration request is under RBI examination) |
| 10 | Muthoot Finance | NBFC-ICC |
| 11 | Aditya Birla Capital | NBFC-ICC |
| 12 | HUDCO | IFC |
| 13 | Mahindra & Mahindra Financial Services | Deposit-taking NBFC-ICC |
| 14 | L&T Finance | NBFC-ICC |
| 15 | Bajaj Housing Finance | HFC |
| 16 | HDB Financial Services | NBFC-ICC |
| 17 | Piramal Finance | NBFC-ICC |
PNB Housing Finance and Sammaan Capital no longer meet the criteria but stay under Upper Layer rules because of the five-year rule (they were on the 2024-25 list). The four government infrastructure lenders (REC, PFC, IRFC, HUDCO) entered the list for the first time.
Entities Exempt from NBFC Registration
These companies do financial business but do not need RBI registration as NBFCs, because another law or regulator covers them:
| Entity | Regulated by |
|---|---|
| Insurance companies | IRDAI |
| Stock exchanges, stock brokers, merchant bankers | SEBI |
| Alternative Investment Fund companies | SEBI |
| Nidhi companies | Ministry of Corporate Affairs |
| Chit fund companies | State governments (Chit Funds Act 1982) |
| Housing finance institutions under the NHB Act definition, Mortgage Guarantee Companies | Exempt from Section 45-IA registration; covered by their own RBI directions |
| Securitisation and Reconstruction Companies (ARCs) | Registered with RBI under the SARFAESI Act 2002, not as NBFCs |
Worked Examples: Which Layer Will the NBFC Be In?
Example 1 (group rule). A group has an NBFC-ICC with assets of ₹400 crore, an NBFC-MFI of ₹250 crore, an NBFC-P2P of ₹150 crore and an HFC of ₹300 crore. Group total = 400 + 250 + 150 + 300 = ₹1,100 crore, which is above ₹1,000 crore. So the ICC and MFI move to the Middle Layer, the HFC is Middle Layer anyway, and the P2P stays in the Base Layer (it always does).
Example 2. Another group has an NBFC-ICC of ₹300 crore, an NBFC-MFI of ₹200 crore, an NBFC-AA of ₹100 crore and a Type I NBFC of ₹150 crore. Total = ₹750 crore, below ₹1,000 crore, so the ICC and MFI stay in the Base Layer.
Example 3 (deposit limit). A deposit-taking NBFC with a BBB− rating has a Net Owned Fund of ₹40 crore. Maximum public deposits = 1.5 × 40 = ₹60 crore.
Types of NBFC Quick Revision Table
| Asked as | Answer |
|---|---|
| NBFCs registered under | Section 45-IA, RBI Act 1934 |
| Principal business test | Financial assets > 50% and financial income > 50% |
| SBR applies from | 1 October 2022 |
| Middle Layer threshold | ₹1,000 crore |
| Upper Layer threshold (2026) | ₹1,00,000 crore |
| Upper Layer list 2026-27 | 17 NBFCs (+2 under five-year rule) |
| Top Layer | Ideally empty |
| HFC | 60% housing finance, 50% to individuals |
| NBFC-IFC | 75% infrastructure lending |
| CIC | 90% in group companies, 60% equity |
| NBFC-MFI | 60% microfinance loans; household income up to ₹3 lakh |
| NBFC-Factor | 50% assets and 50% income from factoring |
| NOF: ICC/MFI/Factor | ₹10 crore by 31 March 2027 |
| NOF: IFC/IDF | ₹300 crore |
| NBFC deposit tenure / max rate | 12–60 months / 12.5% |
Types of NBFC Questions with Answers (Practice Set)
Q1. Under Scale Based Regulation, which layer is "ideally expected to be empty"? (a) Base (b) Middle (c) Upper (d) Top Answer: (d). The Top Layer fills only if systemic risk from an Upper Layer NBFC rises sharply.
Q2. From June 2026, the asset-size criterion for the NBFC Upper Layer is: (a) ₹1,000 crore (b) ₹10,000 crore (c) ₹50,000 crore (d) ₹1,00,000 crore Answer: (d). ₹1 lakh crore and above, as per the latest audited balance sheet.
Q3. How many NBFCs are in the RBI's Upper Layer list for 2026-27? (a) 15 (b) 16 (c) 17 (d) 19 Answer: (c). 17 NBFCs; PNB Housing Finance and Sammaan Capital continue separately under the five-year rule.
Q4. Which type of NBFC always remains in the Base Layer? (a) Housing Finance Company (b) NBFC-Account Aggregator (c) Core Investment Company (d) IDF-NBFC Answer: (b). P2P, AA, NOFHC and Type I NBFCs always stay in the Base Layer.
Q5. An NBFC-IFC must deploy at least what share of its total assets in infrastructure lending? (a) 50% (b) 60% (c) 75% (d) 90% Answer: (c). 75%.
Q6. A microfinance loan is a collateral-free loan to a household with annual income up to: (a) ₹1.25 lakh (b) ₹2 lakh (c) ₹3 lakh (d) ₹5 lakh Answer: (c). ₹3 lakh.
Q7. Which statement about NBFCs is correct? (a) They can accept savings deposits (b) Their deposits are insured by DICGC (c) They cannot issue cheques drawn on themselves (d) They must keep CRR with the RBI Answer: (c). NBFCs are not part of the payment and settlement system.
Q8. The minimum Net Owned Fund for an NBFC-IFC is: (a) ₹2 crore (b) ₹10 crore (c) ₹100 crore (d) ₹300 crore Answer: (d). ₹300 crore (same for IDF-NBFC).
Q9. Which of these is exempt from RBI registration as an NBFC? (a) A gold loan company (b) A Nidhi company (c) A vehicle finance company (d) A microfinance company with ₹500 crore assets Answer: (b). Nidhi companies are exempt; the others need registration.
Q10. In 2019, the RBI merged Asset Finance Companies, Loan Companies and Investment Companies into: (a) NBFC-MFI (b) NBFC-ICC (c) NBFC-IFC (d) NBFC-Factor Answer: (b). NBFC-Investment and Credit Company.
Types of NBFC FAQs
How many types of NBFC are there in India?
The RBI lists about 12 activity-based types (ICC, HFC, IFC, IDF-NBFC, CIC, MFI, Factor, P2P, AA, NOFHC, MGC, SPD), grouped by size into four layers (Base, Middle, Upper, Top) and by liabilities into deposit-taking and non-deposit-taking NBFCs.
What are the types of NBFC as per RBI with examples?
NBFC-ICC (Bajaj Finance, Muthoot Finance), HFC (LIC Housing Finance), IFC (REC, PFC, IRFC), CIC (Tata Sons), plus MFIs, factoring companies, P2P platforms and account aggregators.
What is the Upper Layer NBFC list 2026?
The RBI's 6 August 2026 list for 2026-27 has 17 NBFCs, including REC, PFC, IRFC, HUDCO, Bajaj Finance, Shriram Finance, LIC Housing Finance, Tata Capital, Tata Sons and HDB Financial Services.
What is a Type I NBFC?
An NBFC that does not use public funds and has no customer interface. From 1 July 2026, those with assets below ₹1,000 crore are exempt from registration; larger ones hold a Type I registration and stay in the Base Layer.
Who regulates housing finance companies in India?
The RBI regulates HFCs since August 2019, while the National Housing Bank supervises them.
Can an NBFC accept fixed deposits?
Only an RBI-authorised deposit-taking NBFC with at least a BBB− rating, for 12 to 60 months, at no more than 12.5% interest, up to 1.5 times its NOF. These deposits are not insured by DICGC.
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