Page 292 - CA Final PARAM Digital Book.

➢ Classification
Currently, NBFCs registered with RBI are being classified as:
IFFI inaugurated by CM sponsored by NBFCs

• Investment and Credit Company (ICC)
• Non-Operative Financial Holding Company - (NOFHC)
• Non-Banking Financial Company - Factors (NBFC-Factors)
• Infrastructure Finance Company (IFC) (Only 9 such companies in India, L&T Infrastructure
Finance Company Ltd)&Infrastructure Debt Fund- Non- Banking Financial Company (IDF-
NBFC) (Only 4 such companies in India, L&T Infra Debt Fund Ltd)

• Core Investment Company (CIC) &Systemically Important Core Investment Company (CIC-
ND-SI)(For financing of a particular business group, TATA Capital Limited)
• Non-Banking Financial Company - Micro Finance Institution (NBFC-MFI). (Bandhan Financial
Services Limited)

QNO New Activity Based Classification Old Course – (M23R)
514.300 TITANIUM CNO—NBFC.120
Categorisation of NBFCs carrying out specific activity.
Answer Categorisation of NBFCs carrying out specific activity: As the regulatory structure envisages scale based as
well as activity-based regulation, the following prescriptions shall apply in respect of the NBFCs

i. NBFC-P2P, NBFC-AA, NOFHC and NBFCs without public funds and customer interface will always
remain in the Base Layer of the regulatory structure.

ii. NBFC-D, CIC, IFC and HFC will be included in Middle Layer or the Upper Layer (and not in the Base
layer), as the case may be. SPD and IDF-NBFC will always remain in the Middle Layer.

iii. The remaining NBFCs, viz., Investment and Credit Companies (NBFC-ICC), Micro Finance Institution
(NBFC-MFI), NBFC-Factors and Mortgage Guarantee Companies (NBFC-MGC) could lie in any of the
layers of the regulatory structure depending on the parameters of the scale based regulatory
framework.

iv. Government owned NBFCs shall be placed in the Base Layer or Middle Layer, as the case may be.
They will not be placed in the Upper Layer till further notice

QNO Housing Finance Activities New Course – (SM23)
514.450 TITANIUM CNO -- NBFC.120
Sugam Housing Finance Limited is in the business of housing finance activities having asset size of ₹ 800
crores. Its principal business is of providing finances for housing mainly to individuals. It is not identified
by RBI in upper layer. Under scale-based regulations introduced by RBI, what should be appropriate
classification for such a company?

Is there any specific reporting requirement under CARO, 2020 for statutory auditor of a company engaged
in housing finance activities?
Answer The said company is not identified in upper layer by RBI. Under scale based regulations introduced by RBI,
NBFCs undertaking housing finance activities constitute “middle layer”. The asset size is not relevant in such
a case. All housing finance companies not identified in upper layer would constitute middle layer due to

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