19 shadow banks placed under enhanced regulatory tier
The Reserve Bank of India has designated 17 non-banking financial companies for its Upper Layer regulation in 2026-27, alongside two continuing firms. The classification subjects these 19 institutions to enhanced regulatory requirements for at least five years.
Seventeen entities join high-scrutiny tier
Under the updated Scale Based Regulation framework, the Reserve Bank of India identified 17 non-banking financial companies for the Upper Layer tier based on financial data as of March 31, 2026.
The listing follows a review of identification criteria conducted during 2025-26, which temporarily paused publication of the annual list.
Major institutions in the 2026-27 cohort include REC Limited, Power Finance Corporation, Bajaj Finance, LIC Housing Finance, and Tata Sons Private Limited, whose inclusion remains subject to its pending de-registration request.
Selected entities span infrastructure finance, housing finance, investment, and core investment companies.
Five-year regulatory lock-in applies
Once classified in the Upper Layer, non-banking financial companies must comply with tighter supervisory requirements for a minimum five-year period.
This mandatory duration holds even if a firm no longer meets the selection criteria in subsequent evaluations.
Consequently, PNB Housing Finance Limited and Sammaan Capital Limited remain classified in the Upper Layer despite missing the current benchmark, having been originally designated in the 2024-25 supervisory cycle.
A necessary filter with rigid borders
The mandatory five-year retention policy provides essential supervisory stability for systemic shadow lenders in India.
However, forcing declining firms to maintain costly compliance frameworks long after their systemic importance wanes creates unnecessary operational friction.
The delayed release underscores the difficulty regulators face in maintaining clear boundaries as shadow banking structures grow increasingly complex.