The Reserve Bank of India (RBI) has released its second list of Non-Banking Finance Companies (NBFCs) falling under the 'Upper Layer' (UL) category. This list is part of the Scale-Based Regulation framework which aims to keep a closer eye on very large lenders. This year, 17 entities have been selected, which is one more than the previous year. Being in this group means these companies must follow much stricter rules, similar to those followed by commercial banks.

The list features four major government-owned companies: REC, Power Finance Corporation, Indian Railway Finance Corporation (IRFC), and HUDCO. Notably, Tata Sons Private Limited continues to be on this list. To be classified in the Upper Layer, an NBFC generally needs to have an asset size of Rs 1 lakh crore or more. Once a company is on this list, it must improve its governance and is usually required to list its shares on the stock market within three years.

There have been some changes from the previous year’s list. Two companies, PNB Housing Finance and Sammaan Capital, were removed because they no longer meet the specific criteria for the Upper Layer. However, they cannot relax just yet. Under RBI rules, even if a company drops out of the list, it must continue following the stricter regulations for at least five years from the date it was first classified.

The inclusion of Tata Sons is a major point of discussion in the banking industry. Tata Sons is a Core Investment Company (holding company) and is mostly owned by various Tata Trusts. While the RBI has listed them as an Upper Layer NBFC, the company has applied to cancel its registration as an NBFC. The RBI is still examining this application. If they remain on the list, the company is expected to list on the stock exchange by September 2025.

Inside the Tata Group, there are different views on becoming a public company. Some directors worry that listing on the stock market might hurt the charity work done by the Tata Trusts in healthcare and education. On the other hand, some believe listing will bring more transparency. It would also help the group find more money for new projects like electric vehicles and semiconductors. Legal experts suggest that if the RBI does not allow them to de-register, Tata Sons might have to change its business structure or reduce its total assets.

For bank officers and aspirants, this news is important because it shows how the RBI is tightening control over systemic risk. When large NBFCs grow to a certain size, they can affect the entire financial system if they face trouble. By treating these 17 companies almost like banks, the RBI ensures they have enough capital and better management. This reduces the risk of a financial crisis that could impact the commercial banking sector.

Bankers should also note that these 17 companies will now be under 'bank-like' supervision. This means their internal audits, risk management, and disclosure levels will be much higher than smaller finance companies. For customers and investors, this brings more safety and trust in these large institutions. As the 2025 deadline for listing approaches, the industry will be watching Tata Sons very closely to see if they go public or find another way to comply with RBI's tough standards.